Paper Trading Nifty Straddles

I am going to paper trade nifty stradle buy/sell here fo 6 montha and based on the results will do actual trades

Straddle : Call/Put of same strike price
Stangle : Call/Put of ifferent strike price

Strategy 1:

Sell nifty straddle 5 sessions before expiry of prev month. For Feb, you need to trade this around 22nd jan (aound 5 sessions before curent month expiry). Stop loss 50% of investment, target 50% of investment. You need to do this close to present maket rate to get equal premium on both legs

on 22nd jan , sell for 2700 feb series
Call : 157
Put : 170

Covered in 2373 - 3027 nifty

Need 2 times margin


Strategy 2:

Buy nifty straddle 5 sessions after the start of curent series . For Feb series, buy around 5th Feb. Stop loss 50% of investment, target 50% of investment. You need to do this close to present maket rate to get equal premium on both legs



Its possible you may end up squaring off these trades in 2nd strategy against 1st if there is no movement in nifty or its avaialble to same strike after 10 sessions. I am traking both these stategies independantly to see which one is better.

I will also log the highest/lowest combine premiums fo both strategies even though our sl/target is 50% of investment


Pl be aware for selling options you need to maintain margin of nifty and carries UNLIMITED risk, even though we have 50% stop-loss, due to high gap up/down our stoploss may be useless. Also you can consider selling strangles for Strategy 1 to incease your range. You can also consider far month, but longer the time frame, higher is your risk

PL DO NOT TRADE THESE , WE ARE DOING IT ON PAPER ONLY

Why cant we buy the options instead of selling them,

Bandlab ,
The First strategy is really good and am sure you will make good profits in even paper trades. Next month Options also lose prem quickly in Exp week and in 1st week of new series too.
Prabhjeetrana
What the member wants is to eat PREM DUE TO TIME DECAY. Near Exp , Prem of all Options get reduced at a quick pace and Profit from this scenario can be made only be selling Options and Buying them back at lower rates. Buying Options before exp week will lead us to losses i think.
Bandlab plz confirm. I hope this is your only motto.

Hi Guys,

I have just started few days back reading about Options.

I had learnt that selling the options without owning it is high risk.

I can see from the few comments here that, we are trying to eat premium during expiry week and first week of next month series.

I would say if such is the scenario every month that during the end premium prices decrease and in the first week too

Then why cant we buy the options on the last trading day of first week and then sell it on the last day of second week.

Please suggest or correct me if i am wrong.

I have just started reading about this. I dont know much, so plz suggest on this.

bandlab2, thanks for starting this interesting thread. Just a questions on yr strategy 1, rule for stoploss at 50% of investment.
While selling straddle, our initial investment is anyway ZERO. It is credit position for the account, not a debit position where we pay something to open this trade. Then, what do u mean by 50% of investment as SLoss ?

Maybe I am missing something here or the rule is loosely defined ?

If possible, plz give an example.. or I can wait for few days when we will see it from real life paper trade.

Happy Trading.

Strategy 1:

Sell nifty straddle 5 sessions before expiry of prev month. For Feb, you need to trade this around 22nd jan (aound 5 sessions before curent month expiry). Stop loss 50% of investment, target 50% of investment. You need to do this close to present maket rate to get equal premium on both legs

on 22nd jan , sell for 2700 feb series
Call : 157
Put : 170

Covered in 2373 - 3027 nifty

bandlab2, thanks for starting this interesting thread. Just a questions on yr strategy 1, rule for stoploss at 50% of investment.
While selling straddle, our initial investment is anyway ZERO. It is credit position for the account, not a debit position where we pay something to open this trade. Then, what do u mean by 50% of investment as SLoss ?

Maybe I am missing something here or the rule is loosely defined ?

If possible, plz give an example.. or I can wait for few days when we will see it from real life paper trade.

Happy Trading.