GE Straddle – buying a put and a call at the same time

Today I entered into an options trade called a straddle using poor GE.  You are basically betting on volatility that it will go down or up, but not stay where it is. Either it will turn around for the better, or get much worse quickly. Either way, I’ll profit if it goes below $10.50 or above $12.00. I have all of October to sweat over it. It cost me about $39.00 which is the total of the call and the put I purchased together. That’s my max loss. On the upside, I could make $400 if the price drops to $6.00 and similar profit if the price increases to $16.00.  Take a look at the hypothetical trade added to an options profit calculator to see how this works out. It’s currently trading for $11.38. I got the idea from an article I read today on TheStreet.com. I’M NOT A CERTIFIED INVESTMENT ADVISER OR PROFESSIONAL. PLEASE USE CAUTION AND INVEST AT YOUR OWN RISK.

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