Question

Which of the foloowing position is a straddle? Long a call and long a put with...

Which of the foloowing position is a straddle?

Long a call and long a put with same strike price and expiration date.

Long two calls at different prices ut same expiration date

Short two puts at different prices but same expiration date

None of above

Homework Answers

Answer #1

We know, a long position in a  straddle strategy involves purchasing a put and a call option with same strike price, underlying asset and expiry date. Option B, Option C and Option D cannot be correct as the prices are different whereas a salient feature of straddle is same strike price, underlying asset and expiration date.

Therefore, Option A-"Long a call and long a put with same strike price and expiration date" is the correct answer as it represents a position (long) in a straddle.

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