Where a call option and a put option are sold at the same strike price.
Traders often overlook the SHORT STRADDLE due to its simplicity.
It remains the TOP strategy to make money when the market is not trending.
Here's how you can make money using only the short straddle
in various market conditions
⬇️ A comprehensive thread🧵
Where a call option and a put option are sold at the same strike price.
Max risk = Unlimited
(using SLs would be wise)
Upper breakeven = Strike price + Total Premium received
Lower breakeven = Strike price - Total Premium received
Long-term short straddles usually require fewer adjustments since the range is wide.
You will have to define your criteria based on your risk appetite and the gap between the breakevens.
Ex:- gap between the breakevens is 360 points, so I would prefer making adjustments on every 50-point move.
Suppose the straddle is initially made at 18700 strike price, then,
NIFTY moves up to 18794 ( 94 points from our strike price/ max profit point )
The trader can now create a new straddle at 19000 strike price.
Which provides a larger range
Initial strike price ± 2*(Movement)
In the given example,
NIFTY has shifted to 18499 from our strike price of 18600 (101 points)
The trader can sell a call option for wider range
If the underlying moves drastically in any direction,
The trader can book his profit/loss in the straddle and initiate a new one after the market is relatively calm
NIFTY has moved up by 86 points
We can keep the square off the short call option(at a loss)
and we can
1) Put an SL on the put leg (this would make it a directional trade)
or
2) We can sell a 18850 CE to create a strangle
In the below example,
NIFTY has moved 92 points from our strike price
We can buy 18850 CE to reduce the risk on the upper side.
• For profit booking, trailing stop loss is suggested so that maximum points can be extracted from the straddle
• If one has lost over 2% of his/her total capital, he/she should probably terminate the strategy and book the loss.
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Traders often overlook the SHORT STRADDLE due to its simplicity.
— Mohit Sharma (@mohitsharmadl) December 9, 2022
It remains the TOP strategy to make money when the market is not trending.
Here's how you can make money using only the short straddle
in various market conditions
\u2b07\ufe0f A comprehensive thread\U0001f9f5 pic.twitter.com/inHebjXzZA
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• Positional Strangles
• Intraday Strangles
• Position Sizing
• How to do Adjustments
• Plenty of Examples
• When to avoid
• Exit Criteria
How to sell Strangles in weekly expiry as explained by boss himself. @Mitesh_Engr
• When to sell
• How to do Adjustments
• Exit
Beautiful explanation on positional option selling by @Mitesh_Engr
Sir on how to sell low premium strangles yourself without paying anyone. This is a free mini course in
1st Live example of managing a strangle by Mitesh Sir. @Mitesh_Engr
• Sold Strangles 20% cap used
• Added 20% cap more when in profit
• Booked profitable leg and rolled up
• Kept rolling up profitable leg
• Booked loss in calls
• Sold only
2nd example by @Mitesh_Engr Sir on converting a directional trade into strangles. Option Sellers can use this for consistent profit.
• Identified a reversal and sold puts
• Puts decayed a lot
• When achieved 2% profit through puts then sold
Curated the best tweets from the best traders who are exceptional at managing strangles.
• Positional Strangles
• Intraday Strangles
• Position Sizing
• How to do Adjustments
• Plenty of Examples
• When to avoid
• Exit Criteria
How to sell Strangles in weekly expiry as explained by boss himself. @Mitesh_Engr
• When to sell
• How to do Adjustments
• Exit
1. Let's start option selling learning.
— Mitesh Patel (@Mitesh_Engr) February 10, 2019
Strangle selling. ( I am doing mostly in weekly Bank Nifty)
When to sell? When VIX is below 15
Assume spot is at 27500
Sell 27100 PE & 27900 CE
say premium for both 50-50
If bank nifty will move in narrow range u will get profit from both.
Beautiful explanation on positional option selling by @Mitesh_Engr
Sir on how to sell low premium strangles yourself without paying anyone. This is a free mini course in
Few are selling 20-25 Rs positional option selling course.
— Mitesh Patel (@Mitesh_Engr) November 3, 2019
Nothing big deal in that.
For selling weekly option just identify last week low and high.
Now from that low and high keep 1-1.5% distance from strike.
And sell option on both side.
1/n
1st Live example of managing a strangle by Mitesh Sir. @Mitesh_Engr
• Sold Strangles 20% cap used
• Added 20% cap more when in profit
• Booked profitable leg and rolled up
• Kept rolling up profitable leg
• Booked loss in calls
• Sold only
Sold 29200 put and 30500 call
— Mitesh Patel (@Mitesh_Engr) April 12, 2019
Used 20% capital@44 each
2nd example by @Mitesh_Engr Sir on converting a directional trade into strangles. Option Sellers can use this for consistent profit.
• Identified a reversal and sold puts
• Puts decayed a lot
• When achieved 2% profit through puts then sold
Already giving more than 2% return in a week. Now I will prefer to sell 32500 call at 74 to make it strangle in equal ratio.
— Mitesh Patel (@Mitesh_Engr) February 7, 2020
To all. This is free learning for you. How to play option to make consistent return.
Stay tuned and learn it here free of cost. https://t.co/7J7LC86oW0
