Short Straddle

How you sit on a pony.

Also, a strategy in options trading.

Calls are options that make money when the price of the underlying asset goes up. Puts become profitable as the price of the asset declines. But there's a third direction the price can go: sideways. It may seem boring to bet on a stock holding to a tight range...a bit like betting on a snail race. But the short straddle is designed to take advantage of just that sort of move.

A short straddle is made by writing (selling) both a call and a put for the same underlying asset. Both contracts have the same strike price and expiration. The bet pays off if the asset's price sticks to a narrow trading range.

The investor receives premiums for selling the options contracts, which represent the profit from the transaction. The investor hopes that both contracts expire without being exercised. Then they get to pocket the premiums they received and move on with their lives.

However, short straddle strategy is risky. While it comes with a limited upside (just the premiums received), the downside is fundamentally unlimited. A big move in the price of the underlying asset, and the investor could lose large sums of money.