Short Straddle Calculator

The arithmetic

The default sells the $100 call and $100 put for $3.50 each — $700 credit per straddle.

• Max profit = the credit, $700, only if the stock finishes exactly at $100.
• Breakevens = $93.00 and $107.00.
• Max loss = unlimited above $107; on the downside, $9,300 if the stock goes to zero.

The summary above says Unlimited because it is arithmetically unlimited. There is no strike above the short call to stop the loss growing.

Read this before selling one

A short straddle is the highest-risk common options structure and it wins most of the time. Those two facts are not in tension — they are the same fact. You are being paid a fixed amount to absorb an unbounded tail, so the payment arrives constantly and the tail arrives rarely.

The failure mode is not subtle. A 20% overnight gap on the default position — a takeover, a guidance disaster, a sector shock — costs $1,300 per straddle against a $700 credit. A 50% gap costs $4,300. There is no level at which the arithmetic stops.

If you want this shape with a floor under it, sell an iron butterfly instead: the same short straddle with wings bought against it. You collect less and you cannot be destroyed by a gap.

Margin, and why the position can end before the trade does

Short straddles carry substantial margin requirements that increase as the position moves against you and volatility rises. It is entirely possible to be forced to close at the worst moment — not because the thesis broke, but because the margin call arrived. The expiration chart assumes you are still holding at expiry. Margin is what decides whether you are.

The honest use case

Selling premium into elevated implied volatility, on a liquid underlying, in size small enough that the worst plausible gap is survivable, with a plan to close early. That is a real strategy. Selling straddles because the win rate looks good on a spreadsheet is how accounts end.

Where the 100x multiplier comes from

Product specification, not convention: OCC defines a standard equity option as covering 100 shares, premium quoted in points where one point is $100^[1] — so a $1.85 premium costs $185, and every payoff here applies that multiplier to the leg structure.

One exception is worth knowing about: adjusted contracts, covered on the options profit calculator.

Calculating it is the easy half

The credit is easy to calculate; the tail is what needs the record. The payoff is arithmetic — anyone can run it. What it cannot show is whether you believed the trade when you put it on, or are describing a winner picked out of a month of noise.

That is the gap kappi closes: the position committed before the fact, sealed and timestamped on a log nobody can edit afterwards. A screenshot of this chart proves you can use a calculator; a sealed commit proves you took the trade. $15/month, no free tier.