516A COMPleTe gUIde TO THe FUTUreS MArKeT
 Strategy 8: Short Straddle (Short Call + Short put) 
example . Sell August $1,200 gold futures call at a premium of $38.80/oz  ($3,880 ) and simultane-
ously sell an August $1,200 put at a premium of $38.70/oz ($3,870). (See Table   35.8    and Figure   35.8   .)   
Price of August gold futures at option expiration ($/oz)
Futures price at time
of position initiation
and call and put
strike prices
Breakeven price
= $1,122.50
Breakeven price
= 1,277.50
Profit/loss at expiration ($)
1,000
5,000
10,000
15,000
–10,000
–5,000
0
1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400
    FIGURE   35.7    Profi  t/loss Profi  le: long Straddle (long Call + long Put) 
 tabLe 35.8     profit/Loss Calculations: Short Straddle (Short Call + Short put)  
(1) (2) (3) (4) (5) (6) (7)
Futures price 
at expiration 
($/oz)
premium of august 
$1,200 Call at 
Initiation ($/oz)
premium of august 
$1,200 put at 
Initiation ($/oz)
$ amount of 
total premium 
received
Call Value at 
expiration
put Value at 
expiration
profit/Loss on 
position 
[(4) – (5) – (6)]
1,000 38.8 38.7 $7,750 $0 $20,000 –$12,250
1,050 38.8 38.7 $7,750 $0 $15,000 –$7,250
1,100 38.8 38.7 $7,750 $0 $10,000 –$2,250
1,150 38.8 38.7 $7,750 $0 $5,000 $2,750
1,200 38.8 38.7 $7,750 $0 $0 $7,750
1,250 38.8 38.7 $7,750 $5,000 $0 $2,750
1,300 38.8 38.7 $7,750 $10,000 $0 –$2,250
1,350 38.8 38.7 $7,750 $15,000 $0 –$7,250
1,400 38.8 38.7 $7,750 $20,000 $0 –$12,250