A straddle is an options trading strategy that involves the simultaneous purchase or sale of a call option and a put option on the same underlying asset, with the same strike price and expiry date. A long straddle is generally used when a trader expects significant price movement but is uncertain about its direction, while a short straddle is used when limited price movement is expected. The strategy's potential profit and loss depend on the underlying asset's price movement, option premiums, and implied volatility.
