Option Writing - Derivatives - Indices

[travi]

When selling strangles, do you always maintain Delta neutral by adjusting strangles ?

The most common "so called mistake" I have seen among learners is that they tend to execute strangles at current spot and then look forward to adjust.

One should anticipate the level where it Is most likely to trade at in a given period and consider that price as Mid.

Now coming to delta neutral, that is the goal of the spread, but neutral in terms of quantity is a good way to describe it.
The mistake i'm referring to is, where people try and execute the two legs with almost equal prices of both legs.

This isn't required, keep qty same and target where price will go in a given period or in which range it will expire / or spot where you intend to exit.

 

[tanmayagrawal]

sorry if I have

The most common "so called mistake" I have seen among learners is that they tend to execute strangles at current spot and then look forward to adjust.

One should anticipate the level where it Is most likely to trade at in a given period and consider that price as Mid.

Now coming to delta neutral, that is the goal of the spread, but neutral in terms of quantity is a good way to describe it.
The mistake i'm referring to is, where people try and execute the two legs with almost equal prices of both legs.

This isn't required, keep qty same and target where price will go in a given period or in which range it will expire / or spot where you intend to exit.

Sorry if I have misunderstood you but are you trying to say that selling equal value strangles is not a good thing to do ? First we should sell naked call or put and then try to adjust the option if and only the market goes against us ?

 

[RadhuK]

When selling strangles, do you always maintain Delta neutral by adjusting strangles ?

When strategy is only intra day... where is the time to benefit from adjustment.

IMHO, better to take one sided directional trade, if you follow TA

 

[RadhuK]

Yesterday 5 min BNF. after 10am, trend clearly down. Me short 32000call only (that had Max OI). And then the waterfall effect. Imagine the stress due to short put ( well above 500 at the lowest point). Theta decay would not kick in so early at start of new weekly series.

Some TA would help, even if following ony 20 day Moving Avg and go with the flow

 

[joyesh]

The most common "so called mistake" I have seen among learners is that they tend to execute strangles at current spot and then look forward to adjust.

One should anticipate the level where it Is most likely to trade at in a given period and consider that price as Mid.

Now coming to delta neutral, that is the goal of the spread, but neutral in terms of quantity is a good way to describe it.
The mistake i'm referring to is, where people try and execute the two legs with almost equal prices of both legs.

This isn't required, keep qty same and target where price will go in a given period or in which range it will expire / or spot where you intend to exit.

Agree with you travi.

My 2 cents in addition:

It is not necessary that all adjustments would result in another strangle. The adjustments depend entirely upon the trader's view of the market and the final position post the adjustment may not be a strangle at all.

 

[soft_trader]

Sold USDINR 69.25PE @ 0.0650 this week expiry.
Reason for taking the trade: USDINR might not breach this level by this expiry.

 

[soft_trader]

Sold USDINR 69.25PE @ 0.0650 this week expiry.
Reason for taking the trade: USDINR might not breach this level by this expiry.

What a move by USDINR. Need to make adjustments tomorrow.

 

[mohan.sic]

Two things to look for Max Pain Level, Highest OI
6june
Mx Pain for BNF 31500 and highest OI 31500 for both CE & PE
Mx Pain for NF 11900 and highest OI 12000 Call CE & 11800PE

These two - Max Pain & Highest OI strikes are very overrated concepts.
But they are simply useless.
Please understand, Max Pain strikes & Highest OI strikes are not constant. They simply keep changing with market flow. Market will neither have any special support nor resistance at these levels.

 

[Raj232]

Today no trading for me.. just working this option thing:

Sell 31800 CE for Rs 118.75
Sell 31400 PE 111.25
Total premium collected : Rs 230

Current value of the intraday postion:
31800 CE => Rs 80
31400 PE => Rs 67
Total premium at square off : Rs 147

Profit without effort : (Rs 230 - Rs 147 ) = Rs 83

 

[Raj232]

updated the info above...