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
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1/ Longer-term short straddle:
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:
In the above example, in the March expiry, we have collected 1500 points in the 18000 Nifty Straddle.
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.
2/ Weekly expiries will have a very short range:
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.
Due to these small ranges, people prefer to do weekly Iron Fly instead of Straddles.
This takes care of the undefined risk in a small range in Straddles.
Also requires very slow and easier adjustments.
