Trying to post a complex Budget Strategy & hope I will be able to explain it (with my some grammer mistakes). Pls concentrate fully & read atleast 3-4 times before asking me question. Below is a screen shot of round number Straddle in Budget Expiry Week & Monthly Expiry
You can see I have made an excel starting from 36000 straddle to 40000 straddle. BNF is currently at 37700, so basically going up and down 1500 points approx and doing round number.
For me 36000 is a Bullish straddle as this will run more if BNF goes up and 40000 is a Bearish
For me 36000 is a Bullish straddle as this will run more if BNF goes up and 40000 is a Bearish
Straddle, which will run more if BNF falls. 37500/38000 are ATM or Near ITM or Near OTM straddle.
There are three scenarios for our market after Budget .
1. BNF will go up
2. BNF will go down
3. BNF will stay here with small volatality.
So lets see how to play with different
There are three scenarios for our market after Budget .
1. BNF will go up
2. BNF will go down
3. BNF will stay here with small volatality.
So lets see how to play with different
straddle based on our view today.
Lets Start thinking that BNF will go up big after budget
like last time.
Do remember Budget is on Tuesday and we will have weekly expiry on Thursday.
For my bullish view , I will go and sold 40000 Weekly straddle trading at 2414 and will buy
Lets Start thinking that BNF will go up big after budget
like last time.
Do remember Budget is on Tuesday and we will have weekly expiry on Thursday.
For my bullish view , I will go and sold 40000 Weekly straddle trading at 2414 and will buy
monthly straddle trading at 2843. Cost of trade 429 points. And if my view holds true, then with every single point rise in BNF, the weekly PE will melt for equivalent amount & if BNF does less than 40000 on 3/2 expiry the CE will also become zero. While I will be still having
long position of monthly expiry straddle. Also once I am clear about the Direction of BNF on upside(based on budget) I can always cut my Monthly PE long position and eat more Profit.
Now what If my thesis fails and BNF cracks after the budget. Here also the rise in Weekly PE
Now what If my thesis fails and BNF cracks after the budget. Here also the rise in Weekly PE
(It will behave like future) will be compensated almost 98% by rise in monthly PE and my sold CE of weekly becomes zero . Here as the view has failed, so I need to get out of bought monthly CE which will fall like thin ice with fall in BNF.
The beauty of this trade is that I am
The beauty of this trade is that I am
almost covered on downside and with minimum impact(loss) I will be off it while on being correct, I will get good reward.
Based on your Bullish View, you can do 39000/39500/40000 straddle as per your choice.
Based on your Bullish View, you can do 39000/39500/40000 straddle as per your choice.
Now, suppose my view is Bearish for BNF after budget, So what I will do is :
1. Short 36000 3/2 Expiry straddle at Rs 2185
2. Long 36000 Monthly Expiry straddle at Rs 2851
Cost - 666 points
As explained above , BNF goes down will lead to fall in 36000CE prices of weekly like
1. Short 36000 3/2 Expiry straddle at Rs 2185
2. Long 36000 Monthly Expiry straddle at Rs 2851
Cost - 666 points
As explained above , BNF goes down will lead to fall in 36000CE prices of weekly like
future and if BNF expires above 36000 on weekly expiry then the PE will also become zero. I will still have 36000 monthly long straddle to manage the CE and PE. If I am sure about my trade, I will get out of Long monthly CE after event and will run only long PE.
Now suppose the Bearish view fall on mouth and BNF starts to run. Like above rise in weekly 36000 CE will be compensated almost (90-95%) by rise in 36000CE monthly. Weekly 36000PE becomes zero and I have to exit from monthly CE to get maximum juice.
Always remember nothing comes without risk in market and there is nothing like risk free strategy, there will always be some risk in every trade we do. But doing these can give u good returns if played properly.
Now the third stance of being neutral on market after budget. Just sell weekly 37500/38000 straddle and long the monthly one. In the excel you will see that this strike has the maximum juice/gas.
Also this will require maximum caution as after budget the gas
Also this will require maximum caution as after budget the gas
in both weekly and monthly will vanish. So u have to be very smart on trade management.
Now let me give you one more trade idea for super trader. Suppose my view is bullish on BNF after budget and me sure that BNF will run up. So what to do ??
Now let me give you one more trade idea for super trader. Suppose my view is bullish on BNF after budget and me sure that BNF will run up. So what to do ??
I will short 39000 weekly straddle(Bearish straddle)
Long 37000 monthly straddle (Bullish straddle)
If my view is correct, I am in for a serious reward and If I am wrong then badka bamboo will also come.
Long 37000 monthly straddle (Bullish straddle)
If my view is correct, I am in for a serious reward and If I am wrong then badka bamboo will also come.
Now again, I dont have position in any of the straddle discussed till now. But I may take in future. Neither I advice anyone to do these. All these requires special skill and do consult your financial advisor before taking trade.
The full post is just for educational purpose.
The full post is just for educational purpose.
One more request, dont give me theeta/meeta/gamma gyan on these weekly/monthly trades. I have skill set to manage and most of my traders friends can do the same. So just take this post for educational content. Enjoy it or ignore it
Loading suggestions...