Profiting from Volatility: Long Straddle Setup on Coreweave

The market is once again showing low levels of volatility: the VIX index closed at 14.99, the lowest level seen in 2025. When volatility is low, options become cheaper, opening the door for strategies designed to benefit from sharp price swings. One such strategy is the long straddle.

Today, Coreweave (CRWV) stands out — a stock with significant negative gamma and the potential to make a large move in either direction.

A straddle involves buying a call option and a put option with the same strike price and expiration date. The goal is to profit from a strong price move in either direction, or from an increase in implied volatility.

• Maximum risk is limited to the premium paid.
• Potential profit is theoretically unlimited to the upside.
• On the downside, the price is capped at zero, but can still generate large gains.

The main threat is time decay: if the stock doesn’t move, the premium erodes and the trade loses value.
Trade Setup on CRWVFor options expiring October 17, the setup involves:

• Buying a call with a $95 strike
• Buying a put with a $95 strike

The total premium is $2,520, which is also the maximum loss.

• Lower breakeven: $69.80
• Upper breakeven: $112.02

This means that if CRWV rises above $112 or falls below $70, the trade becomes profitable.

Risk Management
To avoid significant losses, a trader might:

• Set a stop-loss at 20% of the premium (around $500).
• Aim for a profit target of about 40%.
• Consider closing the trade by mid-September if no major movement occurs.

Position sizing is crucial: the trade should not exceed 1–2% of the overall portfolio.

Volatility Factor
Implied volatility (IV) for CRWV is currently 82.36%, the lowest in the past 12 months, compared to a high of 172.94%. This suggests options are relatively cheap, and an increase in IV could benefit the buyer.

Market Background
According to analysts:

• 5 recommend buying CRWV,
• 16 recommend holding,
• 1 recommends selling.

The probability of profit for this setup is estimated at 40.6%.

A long straddle on CRWV may appeal to traders expecting a strong price move. However, if the stock remains range-bound, the position will lose value daily, and losses can occur faster than gains.