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Finance Glossary

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Over 700 finance terms, Shmooped to perfection.

Straddle

Definition:

You feel like something is about to go down with a stock. You can smell it: big change is coming.

The only problem: You don't know whether the stock will soar or tank hard. So... you need an option trade that will make you money in either case.

Allow us to introduce you to the straddle. In this option trade, you buy a put and a call with the same expiration and strike price. Whether the stock goes up or down, you can make money.