Because constructing a long straddle in a foreign currency requires payment of two option premiums, the straddle becomes profitable only if the foreign currency appreciates or depreciates substantially.

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A long straddle involves buying both a call option and a put option at the same strike price and expiration date. The two option premiums paid for the long straddle can be significant, making it profitable only if there is a substantial move in the underlying currency's value. If the currency remains relatively stable, the premiums paid will outweigh any potential profit from the options.

Because Constructing a Long Straddle in a Foreign Currency Requires