Profit on a straddle

Buy put and call for 0.57 and 0.38 respectively with strike of $9. The current share price is $8.8.

What is the profit if the share price doubles?

17.6 - 9 - 0.57 - 0.38


why did we minus the strike price? … I’m just looking at my graph and take all points above the horizontal axis as the profit…

You just need to break it down into the components. You own a call and put. The value of the call is current price minus the strike, the put is not worth anything and to get profit you need to subtract the two premiums you paid.

I"m looking for strap and strip example…can’t find it…

Is that in the curriculum?

Somewhere hidden in the text.

It says if you expect that the volatility is higher than the market expects, you buy a straddle.

In addition, they state that if you also think that you the likelihood is greater that the market increases (so, highly volatile + trending more upward), then you buy a straddle and a call (= strap). Vice versa for put (=strip).

For sure. I never traded these option strategies at work. I only know this stuff from the books laugh

yes, in straddle session.

Do you have a pg number your could reference? Shocking im still finding little gems in the text…

Ah…I only have e-book. It’s above straddle example.

Page 309 right above BB 9. Talks about strip, strap and strangle.

305, sorry, phone won’t let me edit post.

thanks. I knew this…I was just confusing myself today!