An order that goes into force as soon as there is a trade at the specified stop price. The order, however, can only be filled at the limit price or better. The stop price and the limit price can be the same or different. The stop price is the price level specified in the order. A resting order designed to close out a losing position when the price reaches a level specified in the order.
Individuals also use stops to enter the market when the prices reach a specified level.
A straddle trade is based on a price relationship between the two months . The purchase or sale of both a put and a call having the same strike price and expiration date. The buyer of a straddle benefits from increased volatility, and the seller benefits from decreased volatility. Strangle An options position consisting of the purchase or sale of put and call options having the same expiration but different strike prices. The price at which the underlying futures contract is brought or sold in the event an option is exercised.