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Straddle
A long straddle buys a call and a put, both options have the same strike price and expiration date. A long straddle would be executed if the trader expected the undelrying stock to make a big move but wasn't sure of the direction.
A short straddle sells both a call and a put with the same strike price and expiration. The maximum profit for a short straddle is the premium received. The maximum potential loss is infinite if the stock rallies.
See the OptionMath.com Straddle Cheat Sheet
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A long straddle buys a call and a put, both options have the same strike price and expiration date. A long straddle would be executed if the trader expected the undelrying stock to make a big move but wasn't sure of the direction. A short straddle sells both a call and a put with the same strike price and expiration. The maximum profit for a short straddle is the premium received. The maximum potential loss is infinite if the stock rallies. See the OptionMath.com Straddle Cheat Sheet
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