Is "Nifty Income short straddle" strategy on streak really profitable?(see details)

Hello, there is a strategy in Streak named Nifty Income short straddle(screenshot below)

It’s showing good results when tested on 3 months data or even last one week data. I’m interested to deploy it after knowing the pros and cons of that strategy from knowledgeable people here.

  1. Is it really profitable like what it shows?
  2. What are the capital requirements?
  3. The strategy shows more than 30% return in a week. Does it mean if I invest 1 lakh will I get 30% profit in a week? Am I missing any logic here?

Sorry if I sound dumb.

Thanks for your valuable time.

Hi @VijayVJ ,

This result is based on backtesting on actual historical data and not a simulation. And the data is accurate. So you should paper trade for some time to conclude.

You can check out the Basket order feature in Zerodha. You can add 2 legs and the required capital would be displayed. Ideally, it is around 1.3 to 1.4 L for 1 lot.

This percentage is on the highest capital required for a Long position during the backtest period. Streak does not consider margin while backtesting. Now because the strategy takes a Short position, the capital required is high. So you should look at the Absolute Cumulative p/l of the strategy rather than individual percentages. This is also because the strategy involves entering both legs.

If the Absolute Cumulative p/l of the strategy is 7618 for a week, and the capital required for entering the trade is 1.4L. ROI is 5.44%

Also, just because a strategy shows an ROI of 4% does not mean you will make 4% in the next week. It means that given you would have entered as per the rules, you could have made a 4% in the past week. This is not a future performance guarantee. No one genuinely can… not that I know of.

You need to consider brokerage+taxes and slippage. While Streak does allow you to check post brokerage p/l as well. the option strategies entry prices will vary a lot in live market since it is quite volatile. So you need to consider 2-3% as slippage.

This is not meant to be a recommendation to buy or to sell securities.