muhd_nihal

BN Iron Condor

NSE:BANKNIFTY   NIFTY BANK
Following trade is for educational purposes only. An Iron Condor is an option strategy, where the expected outcome for next week is range-bound.

A CE option mentioned below is a European Call Option, while a PE option is a European Put.

A hedger always buys these options and a speculator mostly sells one.

But when the speculator only sells these options, the risk involved is unlimited and the margin requirement is also high. This is called naked option selling. When both CE and PE are sold, it is called a short straddle.

In combination with this, if we buy much farther CE and PE, the short straddle becomes an Iron condor. Here, the idea is to capture the option premium in a range-bound market with reduced risk and margin compared to short straddle.

The spread between buy and call leg is based on optimum use of margin. Since the option premium is credited to us in advance, it is also a credit spread.

Please leave a comment if you need further clarification on the following trade

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Sell 33900PE, Buy 33600PE
Sell 36600CE, Buy 37200CE


The history of trades of this trade model is in the following link:
https://docs.google.com/spreadsheets/u/2...

My concept of trading is not to be an overnight millionaire, but a disciplined method to grow the wealth that you own.
Please leave a like if you like the trade ideas :)

Comments

How do you select strike prices? Support and resistance?
Reply
@mohitmkukreja Yes, demand and supply zones + current volatility
+1 Reply
and when to sell CE side and when to sell PE side?
Reply
muhd_nihal mohitmkukreja
@mohitmkukreja, Since, we are capturing theta, do it at the earliest. Do not try to time it in accordance with price action.
Reply
muhd_nihal mohitmkukreja
@mohitmkukreja, Check the sheet given above for my entry price, both were entered around the same time.
Reply
in some cases, you've entered only CE leg or PE leg. when do you decide to take just one leg?
Reply
muhd_nihal mohitmkukreja
@mohitmkukreja, Based on price action, we can attempt to forecast the direction for the upcoming week as bullish, bearish, or sideways. So if the direction is clear, I take only one leg.
+1 Reply
thank you!
+1 Reply
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