The ‘Difference’ is the amount that remains after one quantity is subtracted from another. The What’s The Difference? Blog is dedicated to this theme as it applies to options trading.

This week we begin with “What’s the difference between a lower strike straddle and a higher strike straddle?” Try to answer that before continuing.

Here are just a few of the differences (in no particular order) that we will blog about in the future:

What is the difference between a butterfly and a condor?

What is the difference between a butterfly and a broken wing butterfly?

What is the difference between a double diagonal and an iron condor?

What is the difference between a one-month calendar and a two-month calendar?

What is the difference between a put and a covered write?

What is the difference between a debit spread and a credit spread?

What is the difference between a call butterfly and a put butterfly?

Answer to “What’s the difference between a lower strike straddle and a higher strike straddle?” is 2 Bull Spreads (twice as many* bull spreads as straddles). Ok, who cares? Some of you might care if you need an idea of how to roll up a straddle or wish to gamma scalp and not use the underlying. This will help you to understand alternatives available to you when you are in a tight spot.

Explanation: Let’s say that the lower strike straddle is represented by 10 MAR 40 Straddles and the higher strike is represent it by 10 MAR 45 Straddles.

Using the Risk Doctor’s New Risk Illustrator Software, we can see that if we Buy 10 MAR 40 Straddles and Sell 10 MAR 45 Straddles, the result (difference) is 20 (twice as many*) MAR 40/45 Bull Spreads.

Legend: Long 10 MAR 40 Straddles: Green Dashed Line and Highlights. Short 10 MAR 45 Straddles: Red Dashed Line and Highlights. Bull Spread: Pink Solid Line and Highlights.

*More details on this subject in Chapter 5 of “Options Trading: The Hidden Reality”.