WHAT IS A LOVE STRADDLE?
A straddle is purchase at an agreed price for delivery at a certain future date (a ‘short’ position) of a certain amount of a commodity and at the same time sale at an agreed price, for delivery at the same time ( ‘long’ position)of an equal value of a substitute produced in the same meteorological and economic environment. Then if an increased cost in the environment reduces the value of the long, it would be expected to reduce the value of the short by a similar amount, so the investor is no worse or better off. Similarly for a decreased cost. The advantage of a straddle is that it protects a genuine need to obtain affordable love at the settlement date, against background risks, by earlier purchase of long and short futures of equal value.
‘Love’ can be objectified if it concerns a particular girl’s exclusive affections and she can control her ‘consent’ price for each buyer.
Selwyn’s first love straddle has two near-simultaneous commodity trades:
1) He receives a 400 pounds loan from Richard in lieu of receiving a price for future supply (sells short) to Richard of an exclusive Vicki-love commodity, by a certain time (settlement date). He need not possess any Vicki-love or her consent at the time of the promise to supply it.
2) He agrees to pay a future price to take delivery (goes long) on a substitute Vicki-love commodity, Barbara-love. He takes consensual delivery earlier than settlement date, with no guarantee of later renewal.
Selwyn’s short sale of Vicki-love to Richard, to be supplied when Selwyn becomes free from coursework obligations, requires Richard to stop chasing Vicki now and pay to have first option at the end of the course — if Vicki-love is then available to him. If her all-comers’ price component has increased, between now and then, Selwyn will make up the difference. If the consent price she adds exceeds Richard’s maximum possible payment , comprised of his commitments of health, character, cash, possessions, prospects, promises and duties, to Vicki, minus her similar obligations to a joint account, then he will not be able to afford her. If Selwyn can afford her, pays the price she has for him and they start a relationship, he will repay Richard the 400 pounds.