straddle definition | Dictionary.com

strad⋅dle

[strad-l]

verb, -dled, -dling, noun

–verb (used without object)

1.	to walk, stand, or sit with the legs wide apart; stand or sit astride.

2.	to stand wide apart, as the legs.

3.	to favor or appear to favor both sides of an issue, political division, or the like, at once; maintain an equivocal position.

–verb (used with object)

4.	to walk, stand, or sit with one leg on each side of; stand or sit astride of: to straddle a horse.

5.	to spread (the legs) wide apart.

6.	to favor or appear to favor both sides of (an issue, political division, etc.).

–noun

7.	an act or instance of straddling.

8.	the distance straddled over.

9.	the taking of a noncommittal position.

10.

Finance.

a.	an option consisting of a put and a call combined, both at the same current market price and for the same specified period.

b.	a similar transaction in securities or futures in which options to buy and sell the same security or commodity are purchased simultaneously in order to hedge one's risk.

Origin:
1555–65; appar. freq. (with -le ) of var. s. of stride

Related forms:

straddler, noun

strad⋅dling⋅ly, adverb

Dictionary.com Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2009.
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Link To straddle

strad·dle (strād'l)

v. strad·dled, strad·dling, strad·dles

v. tr.

1. To stand or sit with a leg on each side of; bestride: straddle a horse.
2. To be on both sides of; extend over or across: a car straddling the centerline.
To appear to favor both sides of (an issue).
To fire shots behind and in front of (a target) in order to determine the range.

v. intr.

To walk, stand, or sit with the legs wide apart, especially to sit astride.
To spread out in a disorderly way; sprawl.
To appear to favor both sides of an issue.
To place a bet in poker before the cards are dealt that is twice the amount of the big blind when one is immediately to the left of the big blind.

The act or posture of sitting astride.
An equivocal or a noncommittal position.
The option to buy or sell a specific asset, such as a block of stock, at a predetermined price before a certain date.
A bet in poker made by the player immediately to the left of the big blind for twice the amount of the big blind before the cards are dealt.

[Akin to stride.]
strad'dler n.

The American Heritage® Dictionary of the English Language, Fourth Edition
Copyright © 2009 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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Straddle

Strad"dle\, v. i. [imp. & p. p. Straddled; p. pr. & vb. n. Straddling.] [Freq. from the root of stride.]

1. To part the legs wide; to stand or to walk with the legs far apart.

2. To stand with the ends staggered; -- said of the spokes of a wagon wheel where they join the hub.

Straddle

Strad"dle\, v. t. To place one leg on one side and the other on the other side of; to stand or sit astride of; as, to straddle a fence or a horse.

Straddle

Strad"dle\, n. 1. The act of standing, sitting, or walking, with the feet far apart.

2. The position, or the distance between the feet, of one who straddles; as, a wide straddle.

3. A stock option giving the holder the double privilege of a "put" and a "call," i. e., securing to the buyer of the option the right either to demand of the seller at a certain price, within a certain time, certain securities, or to require him to take at the same price, and within the same time, the same securities. [Broker's Cant]

Webster's Revised Unabridged Dictionary, © 1996, 1998 MICRA, Inc.
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straddle (v.)

1565, probably an alteration of stridlen, frequentative of striden (see stride). U.S. colloquial sense of "take up an equivocal position, appear to favor both sides" is attested from 1838. The noun is first recorded 1611.

Straddle

An options strategy with which the investor holds a position in both a call and put with the same strike price and expiration date.

Investopedia Commentary

Straddles are a good strategy to pursue if an investor believes that a stock's price will move significantly, but is unsure as to which direction. The stock price must move significantly if the investor is to make a profit. As shown in the diagram above, should only a small movement in price occur in either direction, the investor will experience a loss. As a result, a straddle is extremely risky to perform. Additionally, on stocks expected to jump, the market tends to price options at a higher premium, which ultimately reduces the expected payoff should the stock move significantly.

Related Links

Options Basics Tutorial

See also: Options, Strangle, Strap, Strip

straddle

In futures, the purchase of a contract for delivery in one month and sale of a contract for delivery in a different month on the same commodity.
In options, the purchase or sale of both a call and a put, generally with the same strike price and expiration date. The buyer of a straddle benefits from large price fluctuations in the underlying asset, while the seller of a straddle, who collects the premiums, benefits from small price changes in the underlying asset.

Main Entry: strad·dle
Pronunciation: 'strad-^&l
Function: noun
: the purchase of an equal number of put options and call options on the same underlying securities with the same price and maturity date

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