A short straddle
A) Involves exercising two or more options simultaneously.
B) Increases downside risk.
C) Allows you to profit if a stock price remains constant.
D) Requires a bull market if you are to profit.
E) Involves selling shares you are currently own.

Question

Quizplus · Accepted Answer

A short straddle involves selling both a call option and a put option with the same strike price and expiration date. If the stock price remains constant, the options will expire worthless, allowing the investor to keep the premiums collected from selling the options. Therefore, a short straddle allows you to profit if a stock price remains constant.

A Short Straddle