Short Straddle

A Short Straddle is a neutral strategy, betting on little or no movement in the underlying stock price, so it’s a low volatility play. Ideally, it’s constructed from a short at-the-money call (red) and a short put with the same strike (green). Peak profits occur at the strike, with losses on both sides of the strike if the underlying moves sufficiently far away from the strike. It exhibits limited likely profits, but potentially unlimited losses.