Short Strangle

I'm into NIFTY .I always short strangle.I joined this group to share different views about this strategy in options.

Joe

Dear J,
I FIND YOUR STRATEGY QUITE INTERESTING . WOULD YOU KINDLY ELABORATE ON IT.

FOREST FLOWER

An Example will be Short PE -SEP-4600 @ 180 and Short SEP 4700 at 200.You collect the premium if the market is in between 4200 and 5100 (Approx).It is only recommended for experienced player because if the NIFTY end beyond those ranges there is a potential of Unlimited Risk.

U can manage that unlimited risk through Nifty Future at danger point. No possibility of any loss. U can refer the thread of Linkon07 who does this trading regularly with handsome profit. Thanks & happy trade.....SM

So how do u manage positions if it overshoots the strangle. Care to share.

In normal market condition it is fine.
But if the world has a terrorist attack, bomb blast somewhere, or some news comes from china that hits global badly, or another bank is US becomes the victim of recession, and market hits the circuit, This safe startegy will turn into disaster.

Such events don't come by informing us. And one such event is good enough to take away months /years or earning or maybe throw us out of trading.

Risk management and position sizing is crux here when dealing with such unlimited risk strategy. So please do read / think about them as well.

Happy and safe trading