Example: Long straddle P.2FL graph Straddle

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example of long straddle option strategy


after 50 days, p/l graph of straddle follows (blue line):



example straddle option strategy profit-loss graph


the p/l blue graph negative @ prices approximately 84 107 dollars (these break-even points), means in order strategy profitable after 50 days, stock price should either higher 107 dollars or lower 84 dollars.


as time goes by, due time decay, straddle p/l graph goes down (and becomes more , more unprofitable), until reaches orange line (which p/l of straddle @ expiry). also, distance between break-even points increases.







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