Straddle Blocks refer to a specialized options trading strategy involving the simultaneous purchase or sale of both a call option and a put option on the same underlying crypto asset, with identical strike prices and expiration dates, executed as a large block trade.
Mechanism
A long straddle involves buying both a call and a put, yielding profit from significant price movement in either direction, while a short straddle involves selling both, profiting from minimal price movement. These are typically executed as block trades in Request for Quote crypto environments, where institutional participants seek to take large, specific positions on expected volatility or market stability.
Methodology
The strategic utility of straddle blocks lies in expressing a pure volatility view without a directional bias, or to capitalize on anticipated market stability. Institutional traders use this framework to manage exposure to expected market events, hedge existing positions against large price swings, or generate income from expected low volatility, optimizing their risk-reward profile within crypto institutional options trading.
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