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Showing results for tags 'bear'.
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The aim of the bear straddle is to profit from a very small price decline of the asset and so collect the premiums on both the short call and short put components of the trade. This trade type is risky as large moves (even to the downside) will cause losses that offset any premiums collected, leading to a losing position.
The aim of the trade is to benefit from a decline in the price of the asset below the strike price of the short put leg of the option trade. The trader can then profit from the difference in the strike prices multiplied by the number of shares traded in the deal.