A straddle is a neutral options strategy that entails purchasing a put option and a call option with the same strike price and expiration date for the underlying investment. A trader will profit from a long straddle when the price of the asset rises or falls by more than the total cost of the premium paid from the strike price. As long as the price of the underlying asset fluctuates drastically, the profit potential is practically limitless. In contrast to a strangle, which employs a call and put with separate strike prices, a straddle uses options with the same strike price.
