I have applied Strangle strategy in Bank Nifty( 4 lots) but ended in loss only. I want to analyse and tune myself how it was happened and where is the bug.
Market Price
Script
Traded Time
Premium Value
Amount
19379
BankNifty 19400 CE
2/3/2015 15:20
585.75
58575
BankNifty 19400 PE
2/3/2015 15:20
470.5
47050
19250
BankNifty 19400 CE
2/4/2015 9:50
480
48000
BankNifty 19400 PE
2/4/2015 9:50
484
48400
Changed Value
Market Price
19400 CE
19400 PE
Loss Amount
-129
-105.75
13.5
Amount
-10575
1350
-9225
My question is why Put option was not increased even the market reduced 129 points.
Dear sir,i cant help you with finding the bugs,but i can help save your bucks.options are great way to make money,but if understood wrongly it can create huge impact in our trading,first of all trading in bank nifty options i dont like pesonally cos they have comparatively less volume than nifty and more over in my experience bank nifty calls are active and traded by most.not the puts, may be that the reason.i made money trading the bank nifty calls but never in the puts.try to trade in nifty options or stick with only bank nifty calls.
What you have traded is straddle not strangle. Instead had you traded strangle with 20000 CE and 18500 PE you would have got nice profit but for that you need to give some time . (Unless it is day of big related announcements, very next day you can’t expect profits !!!)Surely before the expiry you can get at least 10 % profits on your investment in less than one month.
Even compare the volatility at that time, am sure volatility did not increase sufficiently. Long strangle need strong trend moves in either direction and Short strangle just needs consolidation…