The diagram for a bought straddle:
A) has a V- shape.
B) is a curve falling from left to right.
C) has an inverted ▲- shape.
D) is a line rising from left to right.

Question

Quizplus · Accepted Answer

A bought straddle involves buying both a call and a put option with the same strike price and expiration date, resulting in a V-shaped payoff diagram, where profits increase as the underlying asset's price moves significantly in either direction.

The Diagram for a Bought Straddle