What Is a Long Straddle?

By Matthew DiLallo – Updated Jun 8, 2025 at 10:56 PM

Key Points

Long straddles allow gains if a stock moves significantly, either up or down, after setup.
The trade's risk is capped at the initial cost, but full loss occurs if stock ends at strike price.
Straddles are chosen for big, uncertain moves, costing less than buying stock and options separately.

A long straddle is an options trading strategy designed to profit from a meaningful price change in an underlying stock or market index. The approach allows investors to make money if the underlying stock or index moves up or down. It offers limitless profit potential while limiting risk.

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About the Author

Matt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

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Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.