Recent market volatility has eased as the possibility of more rate cuts is considered, but it could return at any time. The VIX Index closed at 17.24 after reaching a high of 28 in November. Long Straddles may be beneficial if volatility rises, allowing traders to profit from large moves in any direction.

A long straddle involves buying a call and a put with the same underlying stock, expiration, and strike price. While the potential profit is unlimited, the trader must pay two premiums upfront, which is the maximum loss. The trade will only be profitable if the stock rises above the upper break-even point or falls below the lower break-even point.

Barchart’s Long Straddle Screener for December 2nd highlights trades on popular stocks like KO, OXY, NVDA, AVGO, PLTR, and HOOD. An example with KO using the January 16th expiry shows a $72.50-strike call and put with a $323 premium, offering unlimited profit potential and a 44.2% probability of profit.

Another example with OXY using the same expiry involves a $42.50-strike call and put with a $352 premium. The trade has a theoretically unlimited profit potential and a 43.8% probability of profit.

For NVDA, a long straddle with a $185-strike call and put using the January 16th expiry has a $2,085 premium, unlimited profit potential, and a 43.5% probability of profit.

While long straddles can be profitable, they can also result in quick losses if the stock remains flat or if implied volatility decreases. Proper position sizing and risk management are crucial to prevent significant portfolio losses. Remember that options trading is risky, and it’s essential to conduct thorough research and consult a financial advisor before making any investment decisions.

Read more at Barchart: Long Straddle Screener Results For December 2nd