If you own a call and a put on a stock with the same exercise price and exercise date,your payoffs:
A) will be positive only if the stock price rises.
B) will be positive only if the stock price declines.
C) will always be positive and will increase with the size of the stock price change.
D) will always be positive but will be larger if the stock price is relatively stable.

Question

Quizplus · Accepted Answer

Owning both a call and a put with the same exercise price and date creates a straddle strategy, which profits from significant price movements in either direction.

If You Own a Call and a Put on a Stock