Selling atm call and put

[lokanathpai]

Can we trade this strategy?
Sell ATM Call @ x and Put @ y
Buy Call of strike current+(X+y) and Buy Put of strike current - (X+y)

 

[tradedatrend]

off late at the start of series, combined premium of nifty atm ce & pe has been in the range of around 125/130 = 255/260

if you choose to buy ce & pe at 250 up & down, it would cost you in the range of around 45-50 i,e. 45+50 = 95/100

thus you shall get the premium of approx 250/260 & pay the premium approx 100, and you will have margin of safety upto 260-100= 160 point point from the point of your trade

after that you shall be in loss, but maximum to the extent of bought ce or pe, i.e. maximum 90-100 point

decide accordingly

Can we trade this strategy?
Sell ATM Call @ x and Put @ y
Buy Call of strike current+(X+y) and Buy Put of strike current - (X+y)

 

[lemondew]

Yes it is legal to trade like this
If you are asking will I be always profitable. No you can loose money as the above poster has said beyond certain levels.

Can we trade this strategy?
Sell ATM Call @ x and Put @ y
Buy Call of strike current+(X+y) and Buy Put of strike current - (X+y)