Glossary · Options

Straddle and strangle

Buying both a call and a put, to profit from a big move either way.

Why it matters

You don’t need to know the direction, only that the move will be bigger than the market expects.

How to read it

Expensive when IV is high. Most useful when IV rank is low ahead of a catalyst.

Related

Expected moveThe size of move the options market is pricing for a stock by a given date.Volatility crushThe sharp drop in implied volatility right after an event like earnings.

In the Cluenex app, this explanation opens next to every straddle and strangle figure, with the live reading for the stock you are looking at. Open it in Cluenex