Long StraddleCVX · USRisk: High

Long Straddle on Chevron Corporation

Complete example: Long Straddle on Chevron (CVX) — including strikes, premium, break-even, and interactive payoff diagram.

Market view
Highly volatile — no clear direction
Complexity
Intermediate
Sector
Energy
Typical price
$155
Explained for beginners

Long Straddle in plain terms

Level
Intermediate
Risk
High (limited loss, unlimited profit)
Best in
Highly volatile — no clear direction
Goal
Volatility
What is this strategy for?
Earn when a stock moves sharply — in either direction.
When should I use it?
Ahead of a big event (e.g. earnings) when you expect a violent move.
How do I earn with it?
You simultaneously buy a call and a put at the same strike.
What is the main risk?
If the stock moves too little you lose both premiums — especially after the IV drop.
Who should avoid it?
Holding in quiet phases or straight through earnings — the IV crush eats the profit.

Educational content, not investment advice. Options carry risk up to the total loss of the capital employed.

Underlying

Chevron Corporation for Options Traders

Chevron Corporation is, alongside ExxonMobil, one of the two largest integrated US oil companies and a reliable dividend aristocrat with an attractive yield (~4%). As a defensive energy stock, Chevron shows comparatively low volatility (IV typically 22-35%), driven mainly by crude oil prices (Brent/WTI) and geopolitical events. The combination of a stable dividend and moderate option premiums makes Chevron an ideal underlying for conservative covered call and cash-secured put strategies.

Symbol
CVX
Market
US
IV range
22–35%
Currency
USD
Options note: Traded on US exchanges (CBOE/NYSE); good options liquidity for an energy stock; American-style; weekly expirations (including 0DTE); contract size 100 shares; strikes in $2.50/$5 increments.
Overview

Long Straddle — Quick Overview

The long straddle simultaneously buys an ATM call and an ATM put with the same strike and expiration date. The strategy profits from large price movements in either direction — whether the price rises or falls sharply. Maximum loss is the total debit paid. Particularly popular before binary events like quarterly earnings, central bank decisions, or major product announcements.

Advantages

  • Profits from strong moves in either direction
  • Clearly defined maximum loss (total debit paid)
  • No directional prediction required
  • Benefits from IV increase (positive vega)

Disadvantages

  • Expensive: ATM options have the highest time value premium
  • Time decay works strongly against you if the stock stays flat
  • IV compression after earnings can significantly devalue the position
  • Stock must move more than IV implies to be profitable
Example Trade

Long Straddle on Chevron

Illustrative example based on a typical Chevron price of $155. Strikes and premiums are indicative — actual market prices will vary.

PositionTypeStrikeActionPremium
Long Call (ATM)Call$155Buy (debit)-$5,43
Long Put (ATM)Put$155Buy (debit)-$5,43
Net debit paid-$10,85 (-$1.085 per contract)
Max Profit
∞
per contract
Max Loss
-$1.085
per contract
Break-even
$144 · $166
Payoff

Payoff Diagram at Expiration

Profit and loss of the Long Straddle on Chevron depending on the price at expiration. Values per contract (100 shares).

Suitability

Why Long Straddle for Chevron?

The favorable entry at low IV makes long straddles on this stock cost-efficient. However, the stock must move more than IV implies — less common for quiet stocks. Straddles here make sense before clear binary events (earnings, M&A rumors, product announcements) where an unusually large move is expected.

When is the right time?

  • 1Strong binary event expected (earnings, FDA, M&A, central bank decision)
  • 2IV currently low relative to historical volatility
  • 3No clear directional expectation, but strong movement anticipated
  • 4Stock historically makes larger earnings moves than IV implies
  • 5Short to medium term (7-45 days to expiration)
Deep Dive

Why Chevron for Options Traders

Chevron Corporation is a commodity-linked energy stock with low to moderate implied volatility (IV typically 22–35%). The options trade on US exchanges (American-style, weekly expirations, partly 0DTE, contract size 100 shares). For options traders this means: premiums are reliable, if conservative. That makes Chevron particularly suited to defensive income strategies and defined-risk spreads. One contract equals 100 shares — at a typical price near $155, a single contract ties up roughly $15,500 of capital, which should be factored into position sizing.

Strategy Notes

Long Straddle on Chevron: Practical Notes

Long Straddle on Chevron benefit from the low to moderate IV: the position is cheaper, but only pays off around a clear catalyst with an expected large move.

Historical Context

Historical Context

Energy stocks are tightly coupled to oil and gas prices and react to geopolitical events and OPEC decisions. They often pay solid dividends. For Chevron, implied volatility has historically ranged around 22–35%; at the lower end of that band options are cheap, at the upper end correspondingly expensive. Because the options are American-style, early assignment of short calls is possible around dividends. Anyone trading Chevron options should know the timing of quarterly reports and plan positions deliberately around those dates.

FAQ

FAQ: Long Straddle on Chevron

Which options strategy is best for Chevron?
Given Chevron's low to moderate implied volatility (IV ~22–35%), the best fits are covered calls and cash-secured puts (income), plus cheap butterflies. The right strategy always depends on your market view and risk tolerance — use the filters above to compare strategies by goal and risk.
Are Chevron options suitable for beginners?
Chevron is one of the calmer underlyings and, with a simple income strategy (covered call on shares you own), is quite suitable for getting started. Note: options trading carries risk — this is educational content, not investment advice.
How high is implied volatility on Chevron?
Chevron's implied volatility typically sits between 22% and 35% — a low to moderate level. At the low end options are cheap (good for buyers), at the high end expensive (good for sellers). IV usually rises into earnings and falls afterwards.
CFD or options for Chevron — which is better?
CFDs are simpler and meant for short-term directional speculation, but carry linear loss risk and ongoing financing costs. Options offer defined risk, income and hedging strategies and benefit from time decay — but are more complex. For Chevron with low to moderate IV, options strategies are especially versatile. Compare suitable brokers via the button on this page.
Where are Chevron options traded?
Chevron options are traded on US exchanges. The options trade on US exchanges (American-style, weekly expirations, partly 0DTE, contract size 100 shares). Watch for adequate liquidity (tight bid-ask spreads) and prefer monthly standard expirations for the best execution.
Related Tickers

Related Tickers for Long Straddle

ExxonMobil
XOM
Exxon Mobil Corporation
Plug Power
PLUG
Plug Power Inc.
Siemens Energy
ENR.DE
Siemens Energy AG
E.ON
EOAN.DE
E.ON SE
RWE
RWE.DE
RWE AG
Apple
AAPL
Apple Inc.
More underlyings

Long Straddle on other stocks

ExxonMobil
XOM
US
IV 20–34%
Plug Power
PLUG
US
IV 70–120%
Siemens Energy
ENR.DE
DAX
IV 35–55%
E.ON
EOAN.DE
DAX
IV 20–30%
RWE
RWE.DE
DAX
IV 25–38%
Apple
AAPL
US
IV 20–32%
NVIDIA
NVDA
US
IV 40–80%
Tesla
TSLA
US
IV 50–95%
All 30 Long Straddle examples
Alternatives

Other strategies for Chevron

Covered Call
Monthly income from your stock positions
Iron Condor
Sideways income with defined risk
Cash-Secured Put
Buy stocks cheaper or collect premium

Want to try this strategy yourself?

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