How many of you will do long strangle on budget day? I am also thinking to do so with nifty for the first time. I will buy on 31st Jan at closing price. ( at the money) and sell on on 1st Feb.
Can you give me some idea so that i can do this rightly. .
i might do iron butterfly or iron condor on bank nifty options if i dont have any other postiion to take 
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@VelmuruganSengottai i just learned on google what iron condor and butterfly is after reading your post!
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sometimes i need to google to find the startegy name
condor , butterfuly , reverse condor and revrse butterfly are all very basic strategies âŚ
What you are referring to is a long Straddle (At the money). One day before budget is probably not a good time to open a long Straddle. Chances of obtaining a good profit is low unless some bizarre announcement is made on budget day that rattles/pleases the market a lot.
probably he meant straddle ⌠agree that move needs to be decent enough to compensate for the fall in vixâŚ
Yes i mean straddle
Do you have any experience of doing long straddle with stocks on quarterly result date? I think stock makes big move on that day and it will be very easy to make profit!
There is a very nice app for strategies in Options. It is âOption Strategy Optimizerâ by Quantsapp in play store.
You can check out how ur criterion pan out for different contracts.
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During my initial days as a newbie Options trader, I used to think that a long straddle is the most perfect strategy that one can use to make some quick buck. Afterall, it requires low capital, has low risk since the max I could lose was the low capital I invested in it, itâs direction neutral so I donât have to worry about getting the direction right. Quarterly earnings announcement time seemed perfect for this as a good move post the result is expected. In the first stock I debuted with this strategy, the stock moved 4.5% up post result announcement but I ended up with a loss at the end of the day. I was surprised. The next stock I attempted after 2 weeks, was also up 3% post earnings announcement but I got a higher loss this time. I was baffled. The third time and the last time I thought of trying I remember was on Axis Bank result announcement day. The result was bad and the stock tanked around 7% by the end of the day and I ended up with a minute profit. That was the the time I realized the saying âAll that glitters is not Goldâ. Realized that my knowledge and experience of options is incomplete and I was missing something here. That experience gave me a push to undertake a detailed study of Options and it almost took me a yearâs time to understand the nitty gritties of the Indian Options market.
I am not suggesting that one canât make money with a long straddle before an event, of course a large enough move and money is made, but the odds are low that a very large move may happen that can overshadow a massive drop it volatility post the event. And if you still need proof, then I would say that why not try it out yourself with 1 lot or just paper trade it a few times first.
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IV is really - really on the higher side. This is NOT the time to go LONG on options, irrespective of whatever big movers are expected (either from company earnings reports, or from budget)
All the possibly volatility is already captured in high IV, and hence options prices (premiums) are already high to include any possible big moves either ways.
Stand on the side-ways. Let the budget pass, and then bet. Not at all the right time to be in options market. 
Are you sure? 
Havenât you written about your own experiences: booking losses in long straddle 
Yes, but those were with a long Straddle, and you have correctly alluded to the reason for that in your first post above. 
And what strategies are apt for the budget can very well be deduced from that very post of yours within the first two paragraphs.
So you got it right 
As a options trader making a living out of this market for last many years, I usually avoid placing bets on possible large moves (and advice the same to all).
Long or short around big events - it can be a killer either ways - high risk, high reward.
Rather, it is better to let the dust settle down after the move happens. Then rest of the days are there to make money. Enjoy!
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I booked losses in both long straddles as well as short straddles on results
now rarely i carry positions for the results , even if i carry i hedge if i am short or sell otm options to minimize losses if I am long
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True that! I also donât prefer short straddle as a volatility play, instead Vega negative plays like customized Iron Butterfly give a lower exposure to risk.
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weekly banknifty straddle is trading at 675rs and i dont this coming down much till the budget âŚ
straddle or strangle seems to be risky considering its expiring on the budget day âŚ
shuld do reverse condor or reverse butterfly ( buy atm and sell otm )
Please allow me to clarify:
- BUYing options means you are going LONG. Time decay works AGAINST you if you take a LONG option positions. It works in FAVOUR of the option seller (i.e. SHORT position holder).
To understand with example, please see:
http://futuresoptionsetc.com/2010/04/options-time-decay-in-options-explained.html
So essentially, if you are SHORTING or selling options when the VOLATILITY is high, you will receive a high option premium. The Buyer (who goes LONG) will pay this high premium. So when the volatility is high, sellers benefit.
- Please DO NOT confuse India Vix with stock-specific (or index-specific) volatility. If you are trading, say HDFC options, you need to understand whether the volatility of HDFC stock is high or low. Similarly, if you are trading BANKNIFTY index options, then you need to look at BANKNIFTY index volatility and ascertain if it is high or not.
INDIA VIX is a good indicator of the OVERALL volatility of the Indian stock market as a whole.
However, it SHOULD NOT be assumed to apply for all kinds of stocks/index options.
Hope this clarifies.
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