<h2>Long Straddle Structure</h2>In this article, we’ll cover an intermediate level options strategy called a <a href="https://unusualwhales.com/option-strategies/long-straddle">Long Straddle</a>. And, per usual, we’ll visit an amazing trade found in the Flow on <a href="https://unusualwhales.com/stock/CPRI/flow-overview?">Capri Holdings Ltd ($CPRI)</a>!A trader who wants to speculate on increasing volatility and a large increase or decrease in the underlying stock price can open a Straddle. For this newsletter, we’ll cover the <a href="https://unusualwhales.com/option-strategies/long-straddle">Long Straddle</a>.A Long Straddle is a multi-leg option strategy with two legs. To set up this spread, you buy 1 at the money call, and 1 at the money put, both of the same strike and same expiration. The goal is to capitalize on a large move in the underlying stock in either direction. Another use case for this spread is to capture a dramatic rise in the implied volatility of options, which coincides with rising demand for the contracts in question.<figure class="image"><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc_i4C2jj25FjVDgELG0242KmrI7TIKA7ot6w9u7pGQLrYDZwBp886H3RlsDRoMWeETofXirw0G8n1VFJLcwJk3uU3GC0PGA-p7q4bBnWsZx5GVnOeUlxwQaLmwE4oGqk4gEYiZqmwYYvFIEsRFpOGiLs_J?key=Sgouvmcjoonu3TB2ycgtCA"></figure>Straddle positions are usually utilized around the time of an anticipated catalyst for any given stock, such as earnings or news events. The risk you run with this strategy is that the underlying stock may not move as dramatically as the spread requires. Remember, you’re buying both an at the money call, and an at the money put.&nbsp;Since the calls profit from upside movement, and the puts profit from downside movement, sideways movement or small movement in either direction won’t allow you to profit on one leg or another to offset the losses garnered by the other leg. The put and the call will more or less cancel one another out on small movements in the underlying. You need a big, strong move to profit off of a Straddle.<h2>Long Straddle Example ($AAPL)</h2>Let’s take a look at an example using the Unusual Whales <a href="https://unusualwhales.com/options-profit-calculator">Options Profit Calculator</a> on <a href="https://unusualwhales.com/stock/AAPL/flow-overview?">Apple, Inc. ($AAPL)</a>.<figure class="image"><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfY7BIbz3SBsZ3P2m52aaBtrkY5a84B1BWNMkdF0AxhcFNZrKyJeqAubzJpUoC2-0ZY0SQG8yJDoB0TDDFqfXUtS4vP52h3PfkVeMYBGMfCX8g65_jOtqLPw67OsdJoM0ec7tvu97ukz4su19r88SyGjJWz?key=Sgouvmcjoonu3TB2ycgtCA"></figure>At the time of writing, AAPL was trading at $177.81. We want to speculate on a dramatic movement either up or down on the underlying share price. We buy to open the $177.50 call for 8/25/2024 for $2.87 and the $177.50 put of the same expiry for $1.91. The reason for these strikes is they are the closest strikes to at the money.&nbsp;Our total cost for this trade is a debit of $478. This is our max loss, and it occurs if AAPL stock remains in that range surrounding our entry price of $177.81. Let’s visualize the profit and loss potential of this <a href="https://unusualwhales.com/option-strategies/long-straddle">Long Straddle</a>.<figure class="image"><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdkJRe1GJgavGdYZ3LhBceAJJpv2f6xVpNGnOUEr41LEBEp0zuIVQvl9xBb-6wvkPUA_uXafmSuSDUBSgd3LrXk8eE0HP1DTNo12QFAGSibO6EzwjYDA70S589mwfH2U0Pr2AT_y5lm-uaJ0y4urZzuVkXv?key=Sgouvmcjoonu3TB2ycgtCA"></figure>In the above Profit &amp; Loss Chart, we can see that our losses accrue between the underlying prices of $182.28 and $172.72. This price range is where our call and our put cancel each other out. As mentioned, we need a dramatic move in either direction to profit off of this trade.As with long calls and long puts, our profit potential is technically unlimited on the upside. This is because any given leg of this spread has a max loss of “going to 0”, but the call leg has unlimited potential profit, and the put leg has a hypothetical potential profit capped only by the stock itself going to $0 per share.&nbsp;On this particular $177.50c / $177.50p Straddle, our profits begin accumulating at or above the stock price of $182.27 (+2.5%) where the profits from the Call leg outweigh the losses on the Put leg, OR below the stock price of $172.72 (+$2.9%) where the profits from the Put leg outweigh the losses from the Call leg. It is beyond these prices in either direction that we really see profit potential rise; pictured below.<figure class="image"><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdQwzLvICSzaiV7fJrPP0s6Fpgf-1fBKBy_f6dUaSjcXBSlE4P0cyi-rNt0bLIZveECqVXC9wp9l8k8sQY2wCgcRdtgZOMldQOCGDtYkIlhi3mrazNXkKdm7EZXETP5BgQ0tIl0CW_OINbHgw2uP-KSbYYI?key=Sgouvmcjoonu3TB2ycgtCA"></figure>In a perfect world for this spread, $AAPL will either spike +7% to around $191+ or drop -8% to around $164 or less, where we see the highest potential for gains. But as you can see, the Straddle is a good strategy to utilize around major catalysts with high expected stock movement in either direction, with losses capped at the debit you paid to open the trade (in this case, $478). Although playing earnings is a dangerous game to play, the Straddle could be one of your safest plays with high profitability potential, and a capped loss potential.&nbsp;To view the Earnings schedule and implied moves priced in by the options market for reporting companies, you can use the Table View on the <a href="https://unusualwhales.com/earnings?formats=table">Unusual Whales Earnings page</a>. (Note: we do not recommend trading options around earnings given the volatility and unpredictable nature of stock movement in either direction. This is merely an informational about a specific spread that can be utilized to capitalize on volatility and large directional movement in either direction. As is the case with most option strategies, there is the potential to lose some or all of the money you place on any given trade)<h2>Long Straddle in the Flow ($CPRI)</h2><a href="https://unusualwhales.com/stock/CPRI/flow-overview?">Capri Holdings Ltd.</a> is the owner of famous higher-end brands such as Versace, Jimmy Choo, and Michael Kors. On the morning of August 10th, 2023, an announcement was reached between rival company and owner of brands such as Coach and Kate Spade, <a href="https://unusualwhales.com/stock/TPR/flow-overview?">Tapestry ($TPR)</a> and Capri, wherein Tapestry agreed to acquire Capri for $57 per share in a deal worth $8.5 billion.Prior to this announcement, we noted unusual options activity on two separate contracts for $CPRI; roughly 8,500 contracts of the <a href="https://www.youtube.com/redirect?event=video_description&amp;redir_token=QUFFLUhqa2RFVVg0R3piXzk4anB6U1M4dkJ0VE5NeUNBd3xBQ3Jtc0trM0ZBYl9LOTBjdmZGWGs5ZC1VMGI5aXFZLUREcGd6QUhZTU5iN1dVWVNSZFdMX2Rzb3Bad3lhcDAyaEpfdnItNk5zRXFLclNxaEo5RWZ3aDh4b2lsUmRzNjhEYWx3aTlWMUg1OTBkb2xrVzZrTmpRQQ&amp;q=https%3A%2F%2Funusualwhales.com%2Foption-chain%2FCPRI230915C00042500&amp;v=oAgPoxUVvLM">$42.50 call expiring 9/15/2023</a>, and prior to that, in July, roughly 12,000 contracts of the same strike expiring in November of 2023. <a href="https://www.youtube.com/watch?v=oAgPoxUVvLM">You can see the full video breakdown of this trade with in-depth analysis on the Unusual Whales YouTube video</a>.We’ll focus here on the $42.50 call strike expiring 9/15/2023, given the unusual timing. On Friday, 8/4, we noticed an order of 1,000+ contracts transacted at the ask. The following Monday, another order of roughly 7,000 contracts came in; again, at the ask, indicating the likelihood that these contracts were bought to open.&nbsp;<figure class="image"><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdhe7ApYgAww9qLU4GX3AQiXjVcbKYuPjz86NfhNCw8yIm7btSjF4hVq2MEG-vJwOtrJxxsIcDxsXx1tXkRRI9w9kdxDPTSxs-7S55Pa558raV7v_A7cLK2_v5_AEmw0bzQZnWJfUqmoeQ1PItNAi0C0kYr?key=Sgouvmcjoonu3TB2ycgtCA"></figure>Above, we can see this trader’s entries and exits, as well as their profitability. The average fill price for these contracts ranged from $0.80 to $0.87 per contract, totaling around $700k in total premium spent to open the position. (Closed today refers to August 10th, 2023).On August 10th, following the acquisition announcement, $CPRI rocketed from a sub $35 close to around $54 per share overnight. Below is a visual of the traders’ entries in context with the stock price and announcement.<figure class="image"><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeeo0jG31i5GFg7TDqm2MQ2uBjEYmzAgLvjnHiGEErjXRJMq5ChR3_Q0Pw2fJBuPFVo6AB3Kpcu19pIZyosVvJMY1q0Mt_xjAtp7195ka9Rlzz9eJVjXs818Zo2SgqczAYyExtUK6PiXfqsaZZyZfElcRMj?key=Sgouvmcjoonu3TB2ycgtCA"></figure>Following the announcement, we saw our trader closing out the entire position at an average of $11.63 per contract, for a total of $10.3 million in premium. Some quick math tells us our trader turned their roughly $700,000 position into $10.3 million, and the trade is confirmed as “closed” above (the large red volume candle indicating bid-side activity).As for our November expiration, as of August 10th, the trade was still open, and also deep in profit. Our trade on the <a href="https://www.youtube.com/redirect?event=video_description&amp;redir_token=QUFFLUhqbTkwcDJ2bndqMnoyNGQ4UnZ0V1o4bWVsRlp6d3xBQ3Jtc0tuMFVrTnQyd1Nfc3BnY1UzX3g2S1dhT1ZBVnl0WVdxVWJQazc0dGlpZ3VTMzNCTEoyemdYVV9PWFIyWlB4NlVsMzFhWHlGSjFfLVQ3Q2FMeTlUT09UeEJybFVxbzRFSjJGT0tZakl3SWJRSk9uSHg3Yw&amp;q=https%3A%2F%2Funusualwhales.com%2Foption-chain%2FCPRI231117C00042500&amp;v=oAgPoxUVvLM">November contracts</a>, pictured below, had average entries on their roughly 12,000 contracts of $2.13 and $1.84 respectively for a total of around $2.6 million. At the time of writing, the position appears to still be open, and the contracts traded as high as $12.68 per contract; an unrealized gain of over $12 million.&nbsp;<figure class="image"><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd43VvSJhyL6NJRWYPmHt0P02ISY_xck6BayKbFjnQ0oDo01ppdX34dafsl35unZe0tKwI6Z_WqXUty8hIIE8oUMxvIcQgGWriOg-vM8d90TEFzD4BADnFNHZr4hcANCZCk_Wbt0NMUJYFFaZa4wGzxyiro?key=Sgouvmcjoonu3TB2ycgtCA"></figure>Granted, this position (pictured below) is still open, so the trader has not pockets any profits off of this position as of the time of writing.Please take the time to view the <a href="https://www.youtube.com/watch?v=oAgPoxUVvLM">full video breakdown</a> of these trades, as the video describes key concepts utilized in finding flow such as this. Below are some videos that give an in depth look at these concepts: <a href="https://www.youtube.com/watch?v=1sv0WzHS-XU">In Depth Options Flow Breakdown</a> <a href="https://www.youtube.com/watch?v=oIOWVLTxujM">How to Identify Smart Money Opening Their Options Positions</a><a href="https://www.youtube.com/watch?v=6Yd_zDGZPQo">Unusual Whales: Following Options Flow Using Volume and Open Interest</a><h2>Related Articles</h2><ul><li><a href="https://unusualwhales.com/information/what-is-a-long-straddle">What is a Long Straddle?</a></li><li><a href="https://unusualwhales.com/information/what-are-greeks">What are Greeks?</a></li><li><a href="https://unusualwhales.com/information/what-is-a-long-strangle">What is a Long Strangle?</a></li></ul>

This is a full breakdown of the multi-leg options strategy called the Long Straddle. Using examples directly from the Unusual Whales Flow Feed and Options Profit Calculator, we explain the structure of a Long Straddle, how the strategy works, and how you can spot them in the Flow Feed.

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