Series 7 - General Securities Representative Exam
When would a trader buy a straddle?
She thinks the stock price will trade in rangeA
She thinks that prices will trade outside of a rangeB
She thinks that prices will go down first and then go up and stay in a rangeC
She thinks that prices will explode to the upside, but not immediatelyD
A trader buys a straddle when they think the price will move outside the strike price + total amount of premium paid for the call and put to the upside OR below the strike price minus the total amount of premium paid