What characterizes an Option Straddle?

An option straddle is characterized by a long position in both a call option and a put option that have the same expiration date and the same strike price. This strategy is employed when an investor anticipates significant volatility in the underlying asset but is uncertain about the direction of the price movement. By holding both a call and a put option, the investor stands to profit if the asset's price makes a substantial movement, either up or down, beyond the total cost of purchasing the options.

The essence of a straddle is that it allows the investor to capture gains from large price movements in either direction while managing the risks associated with price fluctuations. This is particularly useful in situations where the investor expects an event (like earnings announcements or significant economic reports) to impact the stock price dramatically but is uncertain of the outcome.

The other options provided do not accurately describe a straddle configuration. For instance, a long position in call and put options at different strike prices refers to a strangle, and that doesn’t adhere to the defining characteristic of a straddle's same strike and expiration. Short positions in options are strategies generally aimed at different investment outcomes compared to the straddle, which is fundamentally a market volatility strategy.