A long straddle profits from a big move in either direction — but the stock has to clear one of two breakeven prices just to cover the combined premium paid for both legs.
How it works
Adding the call and put premiums to the shared strike price gives the upper breakeven; subtracting the same total from the strike gives the lower breakeven.
What this does not include
This does not include a strangle, which uses two different strikes instead of one shared strike — the mechanics are similar but the breakeven points shift relative to each individual strike rather than a single shared one.
How to use this calculator
- Enter the strike price, call premium, and put premium.
Frequently asked questions
When would a trader use a straddle?
When they expect a big price move but aren’t sure which direction — ahead of earnings or another binary event, for example.
What’s the maximum loss on a long straddle?
The total premium paid for both legs, if the stock finishes exactly at the strike price at expiration.
Why does implied volatility matter so much for a straddle?
Higher implied volatility raises both option premiums, widening the breakeven range — the stock has to move even further for the straddle to profit.
