Short Straddle Calculator

A short straddle sells a call and a put at the same strike and expiry, usually at the current price. It collects the largest premium of any two-leg position, and that premium is the maximum gain, reached only if the stock closes exactly at the strike. The loss grows in both directions without a limit, which is why brokers restrict it.

When it is used

Traders sell straddles when implied volatility is high and they expect the stock to stay close to the current price, often right after an event has passed. Market makers and volatility traders run them hedged with stock. Most retail traders prefer the Iron Butterfly, which adds wings for a defined loss at the cost of some premium.

How it makes and loses money

Time decay and falling implied volatility are the sources of profit, and both are strongest for at-the-money options near expiry. Any move costs money, and a fast move with a volatility spike costs money before the stock has gone far. There is no floor on either side.

What to check in the grid

The top and bottom rows show losses that keep growing; the summary calls the risk unbounded on both sides. The row at the strike shows how the profit arrives mostly in the last weeks, which is the tension in every short straddle: the best days are the riskiest.