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SIE: Options
SIE practice questionhardStraddles

A long straddle is most profitable when:

  1. AStock makes a large move in either direction✓ Correct answer
  2. BStock remains flat
  3. CVolatility falls
  4. DOptions expire at-the-money
Explanation

Why AStock makes a large move in either direction

Long straddles benefit from sharp moves up or down. Flat stocks and low volatility favor short straddles.

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