does anyone understand how straddles work? care to explain it in 30 words or less or better yet provide an example?
I suspect that strategies that profit from volatility are making good money right now – anyone employing straddles, spreads, strangles, etc?
Think of it as a put and call option on the same stock. You're betting that the stock will move dramatically (rise dramatically or fall dramatically). You would get screwed if stock doesn't move, and your straddle is worthless on both sides.
