A trader wants to gain a profit by expecting a significant move in either direction of the underlying stock

Finance Nov 03, 2020

A trader wants to gain a profit by expecting a significant move in either direction of the underlying stock. Which strategy best aligns to this goal? Short Call Collar Long Strangle Long Put Submit Answe

Expert Solution

The answer is Long Straddle

Long Straddle is the simultaneous buying of both Call and Put options at the same strike price. So if the stock price moves up tremendously, then he will gain from call and Vice-Versa. This strategy is used in extremely volatile market.

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