Straddle Calculator

What Is a Straddle?

A long straddle involves buying a call option and a put option on the same underlying stock, at the same strike price, with the same expiration date. You pay the combined premium (call + put) upfront, and the position profits from large moves in either direction.

The strategy is most commonly used at-the-money (strike = current stock price). The total cost is the sum of both premiums, and you need the stock to move far enough from the strike to exceed this total cost before the position becomes profitable.

Key Characteristics

• Max Profit: Unlimited on the upside (stock rises far above strike). On the downside, profit is capped at (Strike - Total Premium) × 100 × Qty (stock falls to $0).
• Max Loss: Total Premium Paid × 100 × Qty. Occurs when the stock equals exactly the strike at expiration — both options expire worthless.
• Upper Breakeven: Strike + Total Premium per share
• Lower Breakeven: Strike - Total Premium per share (only if > 0)
• Outlook: Neutral — expecting a large move but unsure of direction
• Cost: Net debit (you pay both premiums upfront)
• Time Decay: Works against you — both options lose time value daily

How to Read the P/L Chart

The solid blue line (At Expiration) shows the straddle’s V-shaped payoff. The vertex (lowest point) is at the strike price, where both options expire worthless and the loss equals the total premium paid. Moving away from the strike in either direction, the P/L rises linearly.

The dashed dark blue line (Today / T+0) represents the theoretical P/L at trade entry, computed using Black-Scholes for both legs. The smooth U-shape shows how the position value changes with the stock price while time value remains in the options.

IV Mode vs. Premium Mode

IV Mode: Enter implied volatility, and the calculator uses Black-Scholes to estimate both the call and put premiums. This mode also enables the “Today (T+0)” P/L curve on the chart, showing theoretical value before expiration.

Premium Mode: Enter the exact call and put premiums you paid (or expect to pay). Useful when you know the actual market prices. Only the expiration payoff curve is shown because IV is needed to compute theoretical values before expiration.

When to Use a Straddle

• Before earnings announcements when you expect a big move but don’t know the direction
• Ahead of FDA decisions, litigation outcomes, or other binary events
• When implied volatility is low relative to expected future volatility
• When you want no directional bias — pure volatility exposure
• Hedging a portfolio against large unexpected moves in a key holding