Components
Long one
put option with a lower strike price and long one call option at a higher
strike price.
Risk / Reward
Maximum
Loss: Limited to the total premium paid for the call and put options.
Maximum
Gain: Unlimited as the market moves in either direction.
Characteristics
When to
use: When you are bullish on volatility but are unsure of market direction....
A long
strangle is similar to a straddle except the strike prices are further apart,
which lowers the cost of putting on the spread but also widens the gap needed
for the market to rise/fall beyond in order to be profitable.
Like long
straddles, buying strangles is best when implied volatility is low or you
expect a large movement of market price in either direction.
Hello Nishita,
ReplyDeleteNice to meet someone specializing in Options!!!
You were very correct and precise in guiding that when we expect high volatility buying long strangles can be good strategy.
Mam, how far the OTM call put should be in percentage from underlying?
One thing I would like to request you which will make this blog much more effective.
Nishita, whenever you are giving some theoretical concept, say like straddle/strangle please explain it with some historical example also. For eg. in strangle or straddle you can post example of Infosys(April 13 series) and Unitech (May 13 series).
One more thing, I dont know whether readers are allowed to post their recommendations/observations in your blog, please do tell.
Regards,
Kishore-Pune
Thanks sir for your remarks.i have got your point you can also Check option
DeleteToday 13 June stock market NSE BSE, The US market decline by heavily what’s why Indian domestic market down with 1 percent and sensex down with 200 pts. today market open at BSE 18820 and NSE 5699
ReplyDeleteshare market intraday tips
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sir the down fall was certain due to international cues.you can also Check option
DeleteHi Mam,
ReplyDeleteGreetings!!
It would of immense help for option followers if you post a article on Implied Volatility. Since it plays a very important role in pricing of options and can be helpful in entering and exit of position in options.
Mam, do guide where do I find charts for historical volatility and daily IV of stocks.
Regards,
Kishore-Pune.
Maybe in time I will consider having this as my blogging platform. Even though lots of people saying this platform is hard to handle.
ReplyDelete
ReplyDeleteA very informative article. Thank you for sharing your knowledge.
I love everything you've posted , I will wait to see you will post next strategy for trade!
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