What is straddle and strangle

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Straddle and strangle are options trading strategies involving the purchase or sale of both a call and a put option with the same expiration date.

A straddle involves buying or selling a call and put option at the same strike price and expiration date.
A strangle involves buying or selling a call and put option with different strike prices but the same expiration date.
Both strategies are used when the trader expects a significant price movement in the underlying asset but is unsure of the direction.
The potential profit is unlimited for both strategies, but the risk is limited to the premium paid for the options.
Example: A trader buys a straddle on a stock trading at $100 by purchasing a $100 call option and a $100 put option. If the stock price moves significantly in either direction, the trader can profit.
Example: A trader buys a strangle on a stock trading at $100 by purchasing a $105 call option and a $95 put option. If the stock price moves significantly but stays within the $95-$105 range, the trader can profit.

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