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Short Straddle
A short straddle involves selling a call and put with the same strike and expiration. Market view The trader generally expects movement and/or volatility to be lower than what the position is effectively selling. Risk An uncovered short straddle can carry very substantial risk, including theoretically unlimited upside loss through the short call.
Why it matters to you
Collecting two option premiums can look attractive, but the strategy sells substantial convexity and can suffer heavily during large moves.