Options trading strangle
Check all your folders for my emails including promotion in Gmail. This free trading course will benefit you a lot. Fill the above form correctly so that free course reaches you. Short strangle is exact opposite of long strangle. I will discuss it soon but before that I would like to tell something. Since I started the options trading course many traders have called me. Most of the traders actually trade this particular trade and you know what, they lose money. I feel bad when I see that most traders lose money. I can only see that the main reason is greed. You will soon learn that short strangle is such a trade that it will tempt you to be greedy. This is a trap and most traders fall for it. In Short Strangle a trader will SELL an OTM out of the money call option and simultaneously SELL an OTM put option. Remember in long strangle a trader buys an OTM call option and an OTM put option. The total lots sold for the call option should be equal to the total lots sold for the put option if you want a neutral Short Strangle. Limited to the premium received Risk: Let me warn you — losses can be severe. In other words — we do not sell the call option to make money, also we do not sell the put option to make money. We sell call option as a hedge against the put option and we sell the put option as a hedge against options call option. Therefore lots of both the options should be same. Now you should understand this — if strangle call option loses money, the put option makes money. And when does that happen? When the underlying goes up. Similarly if the put option loses trading, the call option will strangle money. When does this happen? When the underlying goes down. What happens if the underlying does not move? This is an excellent situation. Time will eat the premiums of both the call and the put option. If the underlying does not move much and remains range bound — both the options will expire worthless and the trader can keep the premium. As you can see, at least one position always make money or both positions makes money. Well this good news is actually a trap and many Indian traders fall for this trap. They just sell both out of the money call and the put options. Next day when they see money in their account — they feel very good as if they have actually won the trade. Little do they realize that they are sitting on a hot tub and the day it gets overheated — they will burn their fingers. Do not underestimate this trade. I used to trade this trade myself. Its a nasty trade, when all goes fine — its a superb trade, but when it does not work — it takes away all your profits made for the last few months and then some principal amount too. When trades win, they think they are masters. And when they lose — they just blame it on luck. Overall in 4 months time the trader looses money. Then he thinks OK, this was the last time I lost money and it will not happen again. If you are trading Short Strangle you should always buy some protection on the call side as well as on the put side. In my course on trading options you will learn some hedging techniques that will help you to limit your losses. Lets sell OTM call strike price of August series. It is currently priced at: Which means if Nifty expires within this range: It looks like a very easy trade. What is the probability that Nifty will go above and go below within the next 30 days? Yes today the chances of moving this much looks small, and the trade looks good. But I can guarantee you the situation will not be same after 10 days. This is the trap. Traders think Nifty will not move beyond this as today it looks impossible. But when Nifty will move points in a single day — the probability of moving beyond these limits will start to get bigger. If it actually goes there the trader will panic and take a stop loss. It does not happen every time though. Sometimes both the options expire worthless and its party time for traders. Only if making money was so easy. It is not an easy trade. When Nifty starts to move in one direction, that side of the option starts swelling in value. The other side starts to shrink — but the problem is it can only shrink to 0. The trader has a limited profit there. After that the losses are unlimited. One of the best ways is to take a stop loss. Once you take a stop loss — your losses cannot accumulate. Then enter the markets again when the picture becomes clear. Another way is to buy options. But by the time you will want to buy an option for protection — you will see trading the options have become very costly. But options you want to hedge, you have to buy it. I can teach you some great hedging techniques. Contact me if you want to learn. One day a trader from Bangalore called me and told that he does Short Strangles. I asked him what does he do when Nifty starts to move beyond his break even points? This is a bad adjustment. What if the markets reverses from that situation? Future moves one point with every one point in Nifty. If next day Nifty opens against the future gap points — months of profits gone. Another good adjustment strategy is to rollover the position. Yes it is good, but the problem still remains. Most of the time when you adjust, you will lose money in Short Strangle. So you should try to rollover soon. In that case you will keep rolling over. If you do not know what rollover means then it is closing the current position and at the same time or soon opening another Short Strangle of the next month expiry. Traders can also change the strike prices. So you should know to create a level where you will either take a stop loss or rollover the position. When you rollover you should make sure you have made the trade somewhat natural. Which means the premium collected from the call side is equal to the premium collected from the options side. This will make sure that profits equal the losses up to certain extend. Also you should try to book profits and exit the strategy as soon as possible as this is an unlimited risk strategy. For example if volatility drops you can make good profit in a few days. You should then exit the trade. And the best adjustment advice: Do not get greedy and trade too many lots when trading Short Strangle. Yes receiving money the next day looks good, but your job is to protect that cash. You will be very worried if Nifty starts to move against your trade. If you want to trade Short Strangle on Nifty I would advise never increase the lot size to more than two, I mean two lots on the call side and two lots on the put side. Never trade them on stocks. You may wipe out your account in matter of days. I offer these two courses online: Any act of copying, reproducing or distributing any content in the site or newsletters, whether wholly or in part, for any purpose without my permission is strictly prohibited and shall be deemed to be copyright infringement. Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However every trade depends on the trader and his level of risk taking capability, knowledge and experience. Moreover stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. Please note that I DO NOT give tips or advisory services by SMS, Email, or WhatsApp or any other form of social media. I strictly adhere to laws of my country. I only offer education on finance, investments on stock markets in the strangle possible way as much as I can through this website. Still, you must consult an authorized advisor or do thorough research before investing in any stock or derivative before trading any strategy given in this website. I am not responsible for any investment decision you take after reading any article given in this website. Knowledge is the only way to get success in stock markets. I try my best to give stock market investing and trading knowledge through the articles posted in this website. Thanks for visiting my website. I started trading stock markets since However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since I am trading Nifty options profitably. Call me if you need any help trading options on I used to do short strangle. Just as you said I have burnt my fingers during the rally time. Later I have started hedging buy buying options say Call when market goes up and also sell another PUT of second Call value. I really feel it difficult to manage but somehow will book least profit and will exit all positions. Please share your thoughts on the same. Nice to hear from you after so many days. Short Strangle is not a good strategy. But when things go wrong, usually every fourth month, it not only took the profits away but it also took away a huge chunk of the principal amount. The problem with managing Short Strangle is that one portion gives huge loss if the stock keeps moving in one direction. Therefore insurance should be bought when initiating the trade and NOT when its required. Imagine not having a Car insurance and meeting with an accident. Sometimes it gets even costlier than the cost of repairing the car without insurance. In real world no company will give insurance after the accident — this is just an example to help you understand the problem. So please buy some OTM options when initiating the trade itself. Exit both positions at one time. Unless you are commanding a substantial amount of capital, trades should be limited to 2 contracts max. Stocks get more affected by large moves during earnings, news, or just flat out panic. The eventual contraction in vega will roll in profits quickly. Profits accumulate on collecting smaller profits over trading over instead of looking for a big home run. Do these and your short strangle losses will dramatically decrease! These kinds of comments help traders. Thank You So Much. Mostly shorting options to earn premium by time decay. My strategy for a short strangle is as follows: Usually this options works for me. And deploy the above strategy again in this options short strangle. You must have started selling options when you lost heavily buying options. This is the story with everyone. Whatever you are doing, it is ultimately naked selling of options means you are not buying protection. You will forget everything and start selling again. This happens years after years. After 30 years your account will still be in small profit or small loss or huge loss — BUT NEVER in HUGE profits. On top of that overnight risk is there — you will not be able to sleep properly. Is this the way to earn money? There are hundreds of ideas to sell options and book profits — but non works when trouble comes. On top of that you cannot compound your profits to make huge profits selling naked options. Please learn to hedge. I deleted your mobile number because this is open to public website — anyone could have seen your number. And ur right…iv burnt my fingers buying options…. However, selling options has been giving me more consistent returns. Iv never hedged a short straddle though… would appreciate if u could explain how to hedge a short straddle. This may be of help: How to play a short straddle. Remember, selling options is not about risk to reward ration, rather it is about probability of wining. And yes, you must and i repeat you must keep on switching your strangles with the trend. Or you learn about delta hedging of your positions. How To Trade Long Call Butterfly. Why I Do Not Offer Nifty Option Tips. Testimonial by a Technical Analyst an Expert Trader - Results may vary for users. Click here to read details of the course. Testimonial by Housewife Trader - Results may vary for users. I am Dilip Shaw. I am a trader like you. I have been trading sincebut lost a lot of money till I then stopped trading and studied options like college exams. Started trading again from and never looked back since. Strangle did a lot of research, read books and did countless paper-trading before being profitable. You can read about me here. My conservative trading course since is helping many retail traders just like you who have a job or business make consistent profits like this: Click here for more strangle. You can do this course from your home. Some traders make amazing profits like Rs. This course helps you learn to trade conservative option strategies for monthly income. Once you finish the course you can start trading immediately. You can start trading from any day. No need to wait for expiry. You will make profits consistently. This course is good if you have a regular job or business. You DO NOT NEED to monitor your trades every second. Before reading please understand that for all 5 strategies, strike selection will be taught. Strike selection while trading Options is the most essential part to succeed. Directional strategy makes money fast. It does not matter which side the stock moves. In fact you make more when you are wrong in the Future trade. Some amazing profits possible here. The stock option trade makes 30, in one trade and if SL is hit there is a way to recover losses plus make 30k in that trade. In the course you will learn how to select the strike prices. You learn when to trade, which strikes to sell which to buy, how much profit target you should be looking for, the best place to take stop loss and what to do after taking stop loss — means how to get that money back. I am very confident that you will make money trading my strategies. To help you succeed I offer few months support for FREE. TA Knowledge NOT required 2. NO Software Required 3. Regular Monitoring NOT Required 4. Continue with Your Job 5. Do Course From Your Home 6. One Time Fee FREE Support For Months. I know English and Hindi. Read the details of the course here. Testimonial Page 1Course TestimonialsTestimonial Page 2Testimonial Page 3Click to read what people say just after taking my course. So many years of trading has thought me one thing - it is always better to make small profits month after month, rather than lose money month after month trying to make too much money. But small money accumulated month after month can become very big in only a few years. Information in this site is for educational purpose trading and is not a recommendation to buy or sell any Stock, Option or Future. I DO NOT give any tips in any form and DO NOT have any intention to give tips in future as well. I only give Stock Market Education in General and Derivative Trading Education in particular through this website. Please note that I DO NOT give tips or advisory services by SMS, email, or whatsapp or any other form of social media. My aim is only to offer education on finance and investments on stock markets the correct way through this website. I am NOT a financial or investment advisor. I just want to help them by spreading knowledge through this website. I have worked hard, done my research properly and written the articles in this website out of my experiences as a trader and also using knowledge I got reading several books, websites, forums, eBooks, online journals etc. However please understand that stock market investments are subject to market risks. Please do your own research before investing in any stock or option or trying any strategy written in this website. I am trying my best to educate option traders especially in India and I hope you find this site useful. Any act of copying, reproducing or distributing any content in the site or newsletters,whether wholly or in part, for any purpose without permission is strictly prohibited and shall be deemed to be copyright infringement. Get limited profit and loss nifty options trading strategies free to make monthly income. JavaScript is required for this content. You Can Read More On My Site Short Selling Of Stocks Options And Futures Margin Blocked Explained What Hedge Can Do It Reduces Losses To A Large Extend Learn Warren Buffett Investing Style Page 2 Hedge Is The Best Way To Avoid Huge Losses From Market Crash Sale Of Shares By Broker Under Collateral Margin For Pay In Shortfall. How to Trade Long Strangle. Arun December 17,1: Dilip Shaw December 18, Hey Arun, Nice to hear from you after so many days. Yung Money September 26,7: TRADE SMALL, TRADE OFTEN. Dilip Shaw September 26,6: Reuben karekar March 23,8: Hi mr shaw iv been trading options for the past 6 months. And deploy the above strategy again in this new short strangle request your inputs on this strategy Regards, Reuben Karekar. Dilip Shaw March 23,6: Reuben karekar March 24, Hi dilip…thanks for ur reply And ur right…iv burnt my fingers buying options…. However, selling options has trading giving me more consistent returns Iv never hedged a short straddle though… would appreciate if u could explain how to hedge a short straddle regards, Reuben. Dilip Shaw March 29,3: Ravinder singh sandhu March 27,6: How To Trade Long Call Butterfly Previous post: Technical knowledge is NOT required. No need to monitor trades every second. Since trades are properly hedged there is no stress in trading my strategies. You can find many testimonials in these pages: Like Our Facebook Page And Get Instant Post Updates For Life. Disclosures Information in this site is for educational purpose only and is not a recommendation to buy or sell any Stock, Option or Future.
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