There are two versions of the straddle, which I found while looking up the real definition of the long straddle. The Strap and the Strip. They are a bullish and bearish twist to the same strategy and I considered one for my CAH straddle trade.
The strap is just weighting the trade toward the bullish side by buying more calls than puts, any ratio will do depending upon how sure I might be of a certain move, this still limits the downside loss should the trade go south but increases the profits if the stock price heads up. Even at this it is still not as profitable as just being right and buying the call or put.
The strip is just the reverse.
Actually, I see there is also a short straddle. This one expects the price to NOT move as I would sell short the calls and puts. Unlike the long straddle the loss is not limited. Should the price move either direction and the option expires ITM then the option will get exercised at my expense. I could always just buy back the options to cut losses though. I have not really investigated this one much at all as I cannot write options right now and I am so stuck on looking for stocks that move that I would be at a loss to try to find stocks that will not move.
Jeff.
Questrade, My direct access discount broker.
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