SIE practice questionmediumStraddles
A short straddle profits when:
- AStock price remains stable near the strike price✓ Correct answer
- BStock price rises sharply
- CStock price falls sharply
- DHigh volatility occurs
Explanation
Why A — Stock price remains stable near the strike price
A short straddle profits from low volatility, as both the put and call expire worthless. It loses with large moves.
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