If you're a fan of very big ranges for your trades, you'll get the biggest one in long-term options.
Long Term can be 3 months, 6 months, or a year away as well.
The only drawback with longer-term straddles is the slippage.
Example:
Short Straddle is the highest payoff strategy in Option Selling.
However, it comes with huge risks as well.
You become good at managing Straddles with adjustments.
Here's a step-by-step breakdown on them:
Collaborated with @niki_poojary
🧵
If you're a fan of very big ranges for your trades, you'll get the biggest one in long-term options.
Long Term can be 3 months, 6 months, or a year away as well.
The only drawback with longer-term straddles is the slippage.
Example:
This is actually low risk compared to the monthly or weekly Straddles.
Beginners:
Can try their hands at long-term options.
You'll get sufficient time to adjust and learn.
Higher risk.
Frequent adjustments.
Below is an example of a weekly Straddle in Bank Nifty.
Premium Collected: 700 points
Bank Nifty at times, moves more than this in a day.
This takes care of the undefined risk in a small range in Straddles.
Also requires very slow and easier adjustments.
First of all, your straddle can go wrong very quickly if you adjust too fast too quickly.
This is why it is important to learn not to adjust till your breakeven arrives in certain scenarios.
Every trader has a different risk appetite.
Some want to skip this procedure altogether and do a % stop-loss on their straddles.
You will know your method with experience only as there is no fixed formula.
The moment the underlying price moves towards one end of the breakeven point, your short straddle will be in loss.
Adjustments would require additional funds, so don't go all in with your capital for shorting straddles.
There are various ways with which one can manage once it goes bad:
- Opening a new straddle
- Rolling up the winning side
- Going inverted
- Opening ratio spread etc.
Methods are explained in detail below:
If one side of the straddle is challenged, the opposing short option could be rolled toward the underlying to receive additional credit.
Additional credit widens the break-even point on the challenged side of the position.
How payoff changes: An example
An inverted position, means the short call is below the short put
Recommended when the options are near to expiry.
If the underlying is going up then one can sell 2/3 times of the winning side, to increase the upper break even.
Look how the payoff increases on the upside:
If one side of the straddle is challenged, open a new straddle where the underlying is trading, without closing the older straddle.
The break-even range would be wider.
Now the payoff would be like a short strangle.
We increased breakeven.
If the underlying is moving up continuously then open a CE ratio spread & vice-versa on the downside.
Close the old straddle and open a new straddle where the market is trading at.
-Eg: Short straddle initiated at 37k, thereafter market moved to 38k hence open a new straddle at 38k.
- Thereafter market moved to 36k so open a fresh straddle at 36k.
If you've sold a straddle that has the breakeven beyond the support and resistance on the chart.
Then you can adjust proactively one the respective S/R is taken out.
If there is a range BO, you can go directional as well.
When it hits the 2x of the total premium collected from the short straddle.
This should be done only when one has done few adjustments to save the position.
ATM options have the maximum extrinsic value however it is certain that one leg would into ITM.
Take profit when you've received 25% of the max profit.
Don't let greed overtake you and exit basis defined % to be profitable in the long run.
Convert short straddle in Ironfly, by buying legs/hedges, with a pre-defined risk.
Rather than buying both leg, one can buy only one leg (directional side) aka broken iron-fly.
Back-test these adjustments for the past 3-4 months.
After gaining confidence, forward test it for another 3 months with a single lot.
Understand the nuances, and only if the is profitable, you should scale up.
https://t.co/QGmb3lw8SO
One of the most important concepts one needs to know in technicals:
— Aditya Todmal (@AdityaTodmal) October 29, 2022
Dow Theory 101.
But most people don't know what it is.
This is the only explanation you need:
Collaborated with @niki_poojary
\U0001f9f5
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More from Aditya Todmal
Master Thread of all my threads!
Hello!! 👋
• I have curated some of the best tweets from the best traders we know of.
• Making one master thread and will keep posting all my threads under this.
• Go through this for super learning/value totally free of cost! 😃
1. 7 FREE OPTION TRADING COURSES FOR
2. THE ABSOLUTE BEST 15 SCANNERS EXPERTS ARE USING
Got these scanners from the following accounts:
1. @Pathik_Trader
2. @sanjufunda
3. @sanstocktrader
4. @SouravSenguptaI
5. @Rishikesh_ADX
3. 12 TRADING SETUPS which experts are using.
These setups I found from the following 4 accounts:
1. @Pathik_Trader
2. @sourabhsiso19
3. @ITRADE191
4.
4. Curated tweets on HOW TO SELL STRADDLES.
Everything covered in this thread.
1. Management
2. How to initiate
3. When to exit straddles
4. Examples
5. Videos on
Hello!! 👋
• I have curated some of the best tweets from the best traders we know of.
• Making one master thread and will keep posting all my threads under this.
• Go through this for super learning/value totally free of cost! 😃
1. 7 FREE OPTION TRADING COURSES FOR
A THREAD:
— Aditya Todmal (@AdityaTodmal) November 28, 2020
7 FREE OPTION TRADING COURSES FOR BEGINNERS.
Been getting lot of dm's from people telling me they want to learn option trading and need some recommendations.
Here I'm listing the resources every beginner should go through to shorten their learning curve.
(1/10)
2. THE ABSOLUTE BEST 15 SCANNERS EXPERTS ARE USING
Got these scanners from the following accounts:
1. @Pathik_Trader
2. @sanjufunda
3. @sanstocktrader
4. @SouravSenguptaI
5. @Rishikesh_ADX
The absolute best 15 scanners which experts are using.
— Aditya Todmal (@AdityaTodmal) January 29, 2021
Got these scanners from the following accounts:
1. @Pathik_Trader
2. @sanjufunda
3. @sanstocktrader
4. @SouravSenguptaI
5. @Rishikesh_ADX
Share for the benefit of everyone.
3. 12 TRADING SETUPS which experts are using.
These setups I found from the following 4 accounts:
1. @Pathik_Trader
2. @sourabhsiso19
3. @ITRADE191
4.
12 TRADING SETUPS which experts are using.
— Aditya Todmal (@AdityaTodmal) February 7, 2021
These setups I found from the following 4 accounts:
1. @Pathik_Trader
2. @sourabhsiso19
3. @ITRADE191
4. @DillikiBiili
Share for the benefit of everyone.
4. Curated tweets on HOW TO SELL STRADDLES.
Everything covered in this thread.
1. Management
2. How to initiate
3. When to exit straddles
4. Examples
5. Videos on
Curated tweets on How to Sell Straddles
— Aditya Todmal (@AdityaTodmal) February 21, 2021
Everything covered in this thread.
1. Management
2. How to initiate
3. When to exit straddles
4. Examples
5. Videos on Straddles
Share if you find this knowledgeable for the benefit of others.
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“We don’t negotiate salaries” is a negotiation tactic.
Always. No, your company is not an exception.
A tactic I don’t appreciate at all because of how unfairly it penalizes low-leverage, junior employees, and those loyal enough not to question it, but that’s negotiation for you after all. Weaponized information asymmetry.
Listen to Aditya
And by the way, you should never be worried that an offer would be withdrawn if you politely negotiate.
I have seen this happen *extremely* rarely, mostly to women, and anyway is a giant red flag. It suggests you probably didn’t want to work there.
You wish there was no negotiating so it would all be more fair? I feel you, but it’s not happening.
Instead, negotiate hard, use your privilege, and then go and share numbers with your underrepresented and underpaid colleagues. […]
Always. No, your company is not an exception.
A tactic I don’t appreciate at all because of how unfairly it penalizes low-leverage, junior employees, and those loyal enough not to question it, but that’s negotiation for you after all. Weaponized information asymmetry.
Listen to Aditya
"we don't negotiate salaries" really means "we'd prefer to negotiate massive signing bonuses and equity grants, but we'll negotiate salary if you REALLY insist" https://t.co/80k7nWAMoK
— Aditya Mukerjee, the Otterrific \U0001f3f3\ufe0f\u200d\U0001f308 (@chimeracoder) December 4, 2018
And by the way, you should never be worried that an offer would be withdrawn if you politely negotiate.
I have seen this happen *extremely* rarely, mostly to women, and anyway is a giant red flag. It suggests you probably didn’t want to work there.
You wish there was no negotiating so it would all be more fair? I feel you, but it’s not happening.
Instead, negotiate hard, use your privilege, and then go and share numbers with your underrepresented and underpaid colleagues. […]
The entire discussion around Facebook’s disclosures of what happened in 2016 is very frustrating. No exec stopped any investigations, but there were a lot of heated discussions about what to publish and when.
In the spring and summer of 2016, as reported by the Times, activity we traced to GRU was reported to the FBI. This was the standard model of interaction companies used for nation-state attacks against likely US targeted.
In the Spring of 2017, after a deep dive into the Fake News phenomena, the security team wanted to publish an update that covered what we had learned. At this point, we didn’t have any advertising content or the big IRA cluster, but we did know about the GRU model.
This report when through dozens of edits as different equities were represented. I did not have any meetings with Sheryl on the paper, but I can’t speak to whether she was in the loop with my higher-ups.
In the end, the difficult question of attribution was settled by us pointing to the DNI report instead of saying Russia or GRU directly. In my pre-briefs with members of Congress, I made it clear that we believed this action was GRU.
The story doesn\u2019t say you were told not to... it says you did so without approval and they tried to obfuscate what you found. Is that true?
— Sarah Frier (@sarahfrier) November 15, 2018
In the spring and summer of 2016, as reported by the Times, activity we traced to GRU was reported to the FBI. This was the standard model of interaction companies used for nation-state attacks against likely US targeted.
In the Spring of 2017, after a deep dive into the Fake News phenomena, the security team wanted to publish an update that covered what we had learned. At this point, we didn’t have any advertising content or the big IRA cluster, but we did know about the GRU model.
This report when through dozens of edits as different equities were represented. I did not have any meetings with Sheryl on the paper, but I can’t speak to whether she was in the loop with my higher-ups.
In the end, the difficult question of attribution was settled by us pointing to the DNI report instead of saying Russia or GRU directly. In my pre-briefs with members of Congress, I made it clear that we believed this action was GRU.