does anyone know what a straddle strategy is? I’m going through some non-cfaii derivatives questions and I got asked what a straddle is. Any ideas what the answer is? Was this covered in the readings? I don’t remember seeing it. 53) Which of the following combination of options would result in a strategy otherwise known as a straddle? (a) Long both a call and a put, with both having a similar strike price and a similar expiry date. (b) Long a call and short a put, with both having a similar strike price and a similar expiry date. © Long both a call and a put, with both having a similar expiry date, however, the call’s exercise price must be higher than that of the put. (d) Short a call and long a put, with both having a similar strike price and similar expiry date.
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Not required at l2… not at this stage of the game anyhow normally used for vol plays in the real world
oh great! Thanks 
straddle is basically long a put and call at the same strike. you are playing volatility, just hoping for a move anywhere/which direction. as long as the stock moves above the total cost of the put+call, then you win. and it’s not important at L2, but thats what it is.