| Position Composition | Risk Profile @ Expiration |
Shown here, both contracts are ATM. But one is usually OTM and the other ITM.
 | Long 1 call, Long 1 Put
Both contracts have the same underlying, same strike price and same expiration. |  | Max Loss: Total cost of the straddle, which is the cost of the long call plus the cost of the long put.
E.g., $1.50 + $1.50 = $3.00
Max Gain: Unlimited. |
| Greeks-at-a-Glance | P&L caused by movement in stock price
| Movement away from strike generates profits; toward strike generates losses. "Non-directional, Delta-neutrual" trade. | P&L corresponding to changes in implied volatility
| Long straddles and strangles benefit from rising IV. Falling IV is detrimental. | Time Decay
C:RR ratio is explained in "Decision Making" | Always Negative. Trader seeks a C:RR ratio above -1.00 and as close to 0.00 as possible. Gamma scalping can help to achieve this. Trader wants to minimize the cost of realized risk while waiting for expected risk compensation. | |
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