covered straddle meaning

An option strategy in which one call and one put with the same strike price and expiration are written against 100 shares of the underlying stock. In actually, this is not a "covered" strategy because asignment on the short put would require purchase of stock on margin. This method is also know as a covered combination.


  1. I don't really understand this stuff, but I believe that a long straddle is different from either a naked straddle or a covered straddle . ( 1 ) In a naked straddle, also known as a short straddle, you sell identical puts and calls . ( 2 ) In a " covered " straddle, you sell identical puts and calls " while owning the underlying stock " . ( 3 ) In a long straddle, you buy identical puts and calls.

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