What is typically the investor's expectation when using a short straddle?

When an investor employs a short straddle strategy, they are selling both a call option and a put option at the same strike price, typically with the same expiration date. The investor's expectation in this scenario is that the underlying asset will experience low volatility and price stability.

This strategy profits when the asset price remains close to the strike price, as the premiums received from selling the options can be retained if neither option is exercised. If the market prices remain stable and do not move significantly in either direction, the options will likely expire worthless, allowing the seller to realize profits from the premiums collected. Therefore, a stable price environment with low volatility aligns perfectly with the investor's goals using this strategy.