Option Sellers are facing tough time because of Rising Vix due to uncertainty. We are expecting India Vix to touch 20+ before FY24 Budget.
Sharing 6 Advanced Option Strategies for free that you can use based in Rising Vix enviroment (sold as a โน 50,000 course!).
A thread ๐งต:
Sharing 6 Advanced Option Strategies for free that you can use based in Rising Vix enviroment (sold as a โน 50,000 course!).
A thread ๐งต:
We have shared 8 basics option strategies already. You can refer to the below thread to clear your basics.
Now let's try out different combination to understand how you can benefit from Rising Vix.
Now let's try out different combination to understand how you can benefit from Rising Vix.
1/ Put Calendar Spread
This means selling the put option of the current expiry and buying the same strike put option of the next expiry.
Nifty Spot is 17800.
I will sell 17800 PE of current expiry and buy the same strike option of next expiry.
Payoff is attached below.
This means selling the put option of the current expiry and buying the same strike put option of the next expiry.
Nifty Spot is 17800.
I will sell 17800 PE of current expiry and buy the same strike option of next expiry.
Payoff is attached below.
Let's decode the above position.
The payoff is similar to Iron Fly where profit is maximum at 18400.
This is because Theta decay of the current expiry will be more than the next week's expiry.
Also, Risk:Reward is quite favorable here, but the Probability of Profit is reduced.
The payoff is similar to Iron Fly where profit is maximum at 18400.
This is because Theta decay of the current expiry will be more than the next week's expiry.
Also, Risk:Reward is quite favorable here, but the Probability of Profit is reduced.
2/ Call Calendar Spread
This means selling the Call option of the current expiry and buying the same strike Call option of the next expiry.
Nifty Spot is 17800.
I will sell 17800 CE of current expiry and buy 17800 CE of next expiry.
Payoff is attached below.
This means selling the Call option of the current expiry and buying the same strike Call option of the next expiry.
Nifty Spot is 17800.
I will sell 17800 CE of current expiry and buy 17800 CE of next expiry.
Payoff is attached below.
Both these strategies looked like neutral strategies, just like Iron Fly.
Let's modify it more and understand directional strategies.
Let's modify it more and understand directional strategies.
3/ Call Cross Calendar Spread:
This means selling the ATM Call option of current expiry and buying the OTM Call option of next expiry.
Nifty Spot is 17800.
I will sell 17800 CE of current expiry and buy 18000 CE of next expiry.
Payoff is attached below.
This means selling the ATM Call option of current expiry and buying the OTM Call option of next expiry.
Nifty Spot is 17800.
I will sell 17800 CE of current expiry and buy 18000 CE of next expiry.
Payoff is attached below.
4/ Put Cross Calendar Spread:
This means selling the ATM Put option of current expiry and buying the OTM Put option of next expiry.
Nifty Spot is 17800.
I will sell 17800 PE of current expiry and buy 17600 PE of next expiry.
Payoff is attached below.
This means selling the ATM Put option of current expiry and buying the OTM Put option of next expiry.
Nifty Spot is 17800.
I will sell 17800 PE of current expiry and buy 17600 PE of next expiry.
Payoff is attached below.
The above 2 strategies looks directional (bullish/bearish).
The payoff is looking skewed because of less theta decay in next week's expiry.
Also, profit is maximum near the ATM region, and it decreases as options move away from ATM.
The payoff is looking skewed because of less theta decay in next week's expiry.
Also, profit is maximum near the ATM region, and it decreases as options move away from ATM.
5/ Cross Calendar Iron Fly:
This means selling the ATM Put and Call option of current expiry and buying OTM Put and Call option of the next expiry.
Nifty Spot is 17800.
I will sell 17800 PE and 17800 CE of current expiry and buy 18000 PE and 17600 PE of next expiry.
This means selling the ATM Put and Call option of current expiry and buying OTM Put and Call option of the next expiry.
Nifty Spot is 17800.
I will sell 17800 PE and 17800 CE of current expiry and buy 18000 PE and 17600 PE of next expiry.
6/ Cross Calendar Iron Condor:
This means selling near the ATM Put and Call option of current expiry and buying OTM Put and Call option of next expiry.
Nifty Spot is 17800.
I will sell 17600 PE and 18000 CE of current expiry and buy 17400 PE and 18200 CE of next expiry.
This means selling near the ATM Put and Call option of current expiry and buying OTM Put and Call option of next expiry.
Nifty Spot is 17800.
I will sell 17600 PE and 18000 CE of current expiry and buy 17400 PE and 18200 CE of next expiry.
How all these strategies will benefit from rising Vix?
So when Vix/IV rises then option premiums spikes. Premium is are higher for far-expiry options compared to near-expiry.
If Vix rises then the far expiry will go up and give profit whereas the near expiry option will decay.
So when Vix/IV rises then option premiums spikes. Premium is are higher for far-expiry options compared to near-expiry.
If Vix rises then the far expiry will go up and give profit whereas the near expiry option will decay.
That's all about the Options Trading Strategy that you can use in a rising Vix environment.
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Also, for live stocks and options trades, you can join our Telegram Channel โคต๏ธ
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