Question About Unbalanced Straddle

[guyentlab000 10]

let s say stock i am eyeing for straddle is quit bullish. As a result calls on the same expiration dates with similar strike prizes tend to be much more expensive sometimes twice as much as the puts on the same expiration date. Now if I would like to put a straddle on this should I buy a same number of calls and puts contracts resulting in twice more expensive calls purchased as puts or different number of calls and puts contracts so that the money amount on both calls and puts would equal?

 

Thanks,

[MadMarketScientist 11]

Interesting question ... I would buy the same number of contracts because a straddle is about profiting when the stock moves in either direction, not about balancing the cost to get into the position. So once the option is in the money, every dollar of movement is 1:1, the initial cost doesn't matter anymore. I would think of the cheaper put as being able to put on a straddle cheaper!

 

MMS