Strangle adjustment

When to adjust strangle , how to adjust , what are the thing to be considered , ie like distance between strikes ( think little bit nifty direction prediction enough if adjusted at right time when moves one side ? ) or IV or Theta , OI S/R ( but OI and maxpain also changes with nifty moves ) .
im starting with example ,

i taken trade first at shorting 1 lot 17200 PE at 67.9 on 20.9.21 , at that time NS at 17537 , 17000 PE was highest OI in option chain , so shorted 17200 PE , ( IV 13.6 ) thought if fall below 17000 will buy stocks in cash ( as currently doing short term swing trades )

When nifty touched days low at 3pm changed naked short from strangle by selling 1 lot 17600 CE at 87.2 ( thought that only 8 days left , collected premium is near 153 points , so upper end would be 17750 will sell some of my holdings would be sold if nifty raise , and 17050 lower end will buy some stocks )

next day when touched and stay ed above 17550 exited PE at 66.7 and CE at 110.2 , with 23 pts loss .

Though expected wont cross below 17200 but if fell same day and also gained to high very next day so no time to gain theta value in both side only iv increased at times to increase premium values , so exited .

( say if sold 17600 CE at same time when sold 17200 PE would get more 35 pts , and this trade would be in gains , but if not adjusted after nifty crossing 17600 now its in more than 100 pts loss )

So here when should i adjusted my strangle , and what things should i consider before entering strangle

@Riyas_Ahamed , @velu , @maddy_Des , … ( mentioned some of option traders previously saw their posts regarding options , if missed others please do your comments also )

Thanks in advance to all .

There is nothing perfect or right adjustment way it solely depends upon time to expiry , your risk appetite and your margin appetite.

You can find n numbers of adjustments on Youtube or Books. You may also create your own unique ways.

I would suggest you use opstra options back testing tools in different market conditions and apply those and compare your results with different ways .Its a great tool to do the testing. You may pick time when nifty was sideways,trending and volatile and do the testing.


Thanks Algoeye .

Got some links related to strangle adjustments and related while searching in the net , posted the same which would be helpful for those who are looking for strangle adjustments.

Though i would be happy if get some replies from option traders from this forum ,

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Some basic ways -

Laddering : This requires you to increase your margin Best Options trading adjustments for Zig Zag moves | Gap up | Gap down | Options Flavour - YouTube

Delta neutral Adjustments : How To Adjust a Strangle | Option Trading Strategies - YouTube ;
Best Way of "Strangle" Adjustment | Live Back Test | Theta Gainers - YouTube

Price Neutral: How to Correctly Adjust Strangles That Go Bad - YouTube

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Thanks @AlgoEye

when comes to short straddles/strangles , NO adjustment is the best adjustment …
also instead of blindly selling , sellers should know when to avoid … like avoid SS when going to events , if premiums are already down , big gaps ( esp gap up )

Views are for Intraday only :hugs:
There are many non-directional sellers who keep hugging the spot for them frequent adjustments are necessary ( like ronak , shreyas bandi )

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Thanks @velu

This may sound off-key and long winded but might help you understand if and when to adjust positions.

If you can get past the first few minutes of this video, maybe you will know where to look for your answers. How Options are Impacting the Underlying Market (Gamma, Vanna and Charm Explained)

And if all of this still makes sense to you, maybe consider reading up on this paper: Who Profits From Trading Options? by Jianfeng Hu, Antonia Kirilova, Seongkyu Gilbert Park, Doojin Ryu :: SSRN

These are only pointers and not direct answers to your question but hopefully you will find what you need from these.


@joyesh Thanks for sharing these ! I think you may create a separate thread and share some more whitepapers if you are ardent reader of whitepapers(if you find more interesting studies and concepts) particularly about market makers etc.

@joyesh , Thanks for the links ,

The idea is

1} Exit entire position if showing 50% profit.

  1. keep the short options otm while rolling the other leg as reqd.

3)Hedge delta if one side gets itm .

Hope that helps

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Hi Guys , Shorted one far otm strangle at previous expiry day , premium eroded 60 % till day before yesterday , and yesterday when nifty starts to fall it came to 45 % , again today it came to 62 % decay of premium sold , and exited with ROC nearly 5 % ,
Does exiting short strangle at 50-60 % of sold premium is maximum ?
or can wait till expiry to get maximum if it is far otm ?
or it is not wise to block margin for that balance premium as there is chance to nifty reverse direction so have to wait for this levels again ?
it is better to short at fall as PE preimum and IV would be higher ? ( as usually PE have more premuim than CE )

I did a deep study of Strangles and straddles pay off with data over 10 years across different markets/instruments. Similar studies also done. by others General rule for my target is 50% premium for strangle and 25% premium for straddle at the time of initiation( after whatever adjustments you are doing) i square off my trade. When you follow general rule other things nullify in long run( sometimes you make more sometimes you loose, one time i made more than 70% and i waited i end up hitting Stop loss, that taught me that you have to follow rule in the game of greed and fear).Law of Large trades showed me this insights.

Again this my rule and my study was done based upon my quant models which have many other parameters, you can do your study and create general rule. Max profit is unlimited when you include adjustments as premiums changes. Stop loss and targets have to be set before initiating the trade(hard or soft)


Thanks for your inputs @AlgoEye