Commodity Spread Straddle
A commodity straddle is an options trading strategy where a trader buys both a call option and a put option on the same underlying commodity, with the same strike price and expiration date. The goal of this strategy is to profit from significant price movement in either direction—whether the price of the commodity rises or falls. Since the trader is betting on volatility, the strategy is considered neutral. However, the trader’s profits must exceed the total premium paid for the options in order to be profitable. This strategy is useful when there is uncertainty about the direction of price movement but an expectation of high volatility.
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