Adjusting Short Strangle on Expiry


#1

Guys, I have a query regarding shorting Banknifty options on weekly expiry.
Suppose on Expiry Thursday, spot price is at 27500 and I short the 27700 Call and 27300 Put.
Now sport moves up and crosses 27700, I will definitely book the 27300 Put and sell the 27500 Put.
But what to do about 27700 Call? Should I book the loss on the call and move further above at 27800 or 27900 CE?


#2

I think it depends on how violent the movement is. You can gradually start buying options or go long or short in futures to hedge your short options if the movement is very violent.

Personally I feel in these kind of scenarios there’s no point in firefighting just try to exit quickly from the losing positions and collect premiums in opposite side as much as you can.

One good indicator for these kind of scenarios​ is ADX, you can google about it if you don’t know.


#3

Thanks Shivansh for the reply. Even I agree that firefighting wont do much good. Just need the stomach to book the loss quickly. I will look into ADX as well.