Long Straddle
Performance depends on movement, not direction.
Objective
To benefit from a significant variation in the markets, without anticipating the direction, with a risk known in advance.
Principle
OIS Finance, as a discretionary manager , implements a strategy to take advantage of a strong market movement, whether upward or downward, depending on the client's profile.
When markets are likely to fluctuate significantly,
OIS Finance is structuring a strategy adapted to this scenario.
The direction of the market matters little.
Only the amplitude of the movement is decisive.
The risk is limited to the amount invested.
Scenario: 1
Stable market:
the strategy does not deliver performance
and the loss is limited to the amount invested.
Scenario: 2
Market is booming:
the strategy is generating performance.
Scenario: 3
Market in sharp decline:
the strategy also generates performance.
Summary
High volatility → Opportunity
Limited risk → Visibility
Indifferent direction → Flexibility
📊 Numerical example – Long Straddle
Market situation
Underlying asset: stock / index X
Current price: 100
Anticipation: strong movement , without knowing the direction
OIS Finance acts as discretionary manager
Structure put in place
Buying a call option with a strike price of 100 → 6 CHF
Buying a put option with a strike price of 100 → 5 CHF
Deadline: 3 months
Quantity: 1 contract (100 units)
Cost of the strategy
Prime call: 600 CHF
Prime put: 500 CHF
➡️ Total investment: CHF 1,100 ➡️ Maximum risk: CHF 1,100
Neutral points
Up: 111 (100 + 11)
Down: 89 (100 – 11)
Scenarios at the end of the term
🔴 Stable market (around 100)
Both options expire worthless.
Maximum loss: -1,100 CHF
🟢 Sharp increase (e.g., 120)
Call gain: (120 – 100) × 100 = 2,000 CHF
Net result: +900 CHF
🟢 Sharp drop (e.g., 80)
Put gain: (100 – 80) × 100 = 2,000 CHF
Net result: +900 CHF