🔫🚨MY EDUCATIONAL CONTENT IN A THREAD🚨🔫

Here's a little thread I put together with some of the strategies I utilize every day in my trading.

1. @unusual_whales Intraday Analyst
2. Scalping
3. Scaling Out
4. Watchlists
5. Indicators

Short Strangle

Net credit with a sideways stance

A thread 🧵

#options #trading

1/ Short Strangles

As the name suggests, you need to sell options in this strategy

It involves 2 legs:

Short OTM CE

Short OTM PE

2/ Stance

You expect the market to trade within a narrow range. A narrow range means low volatility and hence lowering option premium due to theta decay

3/ Net Credit Strategy

Shorting options means that you will receive premium

Ex Nifty spot 16200

To create Short Strangle

Short 16300CE @92

Short 16100PE @132

Total premium received = 92 + 132 = 224

4/ Maximum Profit

The max profit is the premium received at entering the strategy, possible when the market expires within or at the selected strikes

In the Ex, expiry at or between 16100 or 16300, means options go worthless due to theta decay and you receive 224 points per lot

A THREAD

Topic: HOW TO TRADE IN RISING PREMIUMS SCENARIO

Option sellers specially Straddle sellers feel that rising premiums give them excellent opportunity to make easy money. So what they are seeing is the theta aspect of options & ignoring the delta/gamma/vega forces.

1/

With rising premiums come high delta moves. There is a reason why premiums are all increasing up in the first place. High uncertainty & fear is what's controlling the markets during such times. So a volatile 200 point move in nifty is always on the cards.

2/

Adjusting during such delta moves involves high slippages. Such costs go in our system & are irrecoverable. So if the ATM straddle is around 400 & after 200 point downmove, the next straddle is at 450 & the loss is not just 50points but compounded much more.

3/

Also there are chances that there is no decay throughout the day. So a straddle seller has to take that heavy risk of carrying it forward & chances of gap openings are high during such times. If converted into Ironfly, then the cost of the wings is too expensive.

4/

Thus cutting down the initial credit significantly.

There will also be very few instances when premiums don't fall till expiry day. So with each delta move the cost of holding a straddle gets accumulated & pressure keeps mounting for the stubborn option sellers.

5/

@Arindamazumder Namaste, the unroll you asked for: Here comes the 3rd and final part of the long weekend 'Beginners'… https://t.co/zymIw0BrA8 Share this if you think it's interesting. 🤖

In this thread, I'll walk you through my set up, absorb it as much as you can.
The instrument that I trade in are Nifty (NF) options
Thanks to @AdityaTodmal @niki_poojary for contributing in making this

How to set your charts:

Lets try to understand what to sell when 50EMA, VWAP & RSI works in different scenarios

What options to sell and how to place the SL

Important to have a birds eye view when trading in NF options as many stocks influences its movement