We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.
Key takeaways from this chapter
- Short straddle requires you to Sell the ATM Call and Put option simultaneously. The options should belong to the same underlying, same strike, and same expiry
- By selling the CE and PE – the trader is placing the bet that the market won’t move and would essentially stay in a range
- The maximum profit is equal to the net premium paid, and it occurs at the strike at which the long straddle has been initiated
- The upper breakdown is ‘strike + net premium’. The lower breakdown is ‘strike – net premium.’
- The deltas in a short straddle add up to zero
- The volatility should be relatively high at the time of strategy execution
- The volatility should decrease during the holding period of the strategy
- Short straddles can be set around significant events, wherein before the event, the volatility would drive the premiums up, and just after the announcement, the volatility would cool off, and so would the premiums.
Please make videos on options strategies.. Eager to learn… and do share intraday strategies… for equity trading…
Noted.
Hi Karthik,
Can we please get Zerodha Varsity app for iPad also ? I think it is really really required.
Let me check this, Malik.
Congratulations, and many thanks for an excellent presentation. You addressed the subject with command, clarity and understanding. Many of us now understand the intricacies of options trading and how to deal with it much better. I especially appreciated your examples and the rule points you applied to each. I wish you success in your efforts to educate learners like me. Your slides and infographics made a convincing arrangement. Thank you for your careful preparation. Please let me know the names of the software packages that you have used for preparing this presentation.
Thanks, Dr.Abhijit I’m glad you liked the content. In most cases, its just MS Excel that I’ve used.
You should have mentioned high risk in hedging with sell options. Where your 1 premium of 100 can become 0 and another premium of 100 can become 2000 and you’ll be eventually in loss of 1900 * 25 per lot. I wonder why didn’t you mention
Hmm, ok. But these are things you can control with SLs right?
Thankyou Karthik and Prateek ji..
As a beginner i learnt a lot. . awaiting for your next video series.
Happy learning, Priya!
Hello Karthik! First of all thank you for making these video series, it is really helpful for a complete beginner like me .
I’m just waiting for the video series from module 6, And i genuinely appreciate ur effort towards the same.
cheers
Thanks, Arvind. As of now, there is no plan to make a video series for Module 6, but that said, let me see if we can add these videos.
Just finished watching all the videos. All your efforts are highly appreciated, please accept my deepest gratitude dear Karthik, Prateek and team Varsity 🙂
Thanks for the kind words, Deepak!
Great Work Kartik! I just watched the video lectures for refreshing my mind and make the concepts clearer. The video series is very helpful for both beginners and those willing to re-learn just for getting things fixed in the mind.
Thanks for the kind words, Keshav. Happy learning 🙂
Karthik – You are a fantastic teacher. I loved every single video of yours. With your teaching, you should be actually owning a new age company like Byju’s or Udemy…..
I’m glad you liked the content, Amit. Zerodha is good enough for me 🙂
Sir, I read through the Text you provided after the module. I’m talking about the topic: – How to choose a strike price? In this, I didn’t understand what the meaning of the 1st Half of the series and 2nd half of the series was while I was reading about the time to expiry and choosing the right strike price. As you mentioned in the text the 1st half of the series means the first (1-15 days) in the expiry month and (the 16th- 30) days belong to the 2nd half of the series. Is it right? But when you plotted the graph, you mentioned (in all the graphs) that When you are in the 2nd half of the series and the time to expiry is 25 days. How there can be 25 days to expiry while I’m in the 2nd half of the series? Just clarify sir on this. I’m very confused.
The series division (1st half, 2nd half) is based on how many days are there to expiry and then dividing it over in half. For example, if tehre are 10 days to expiry from today, then the first 5 days would be the first half of the series, and the last 5 days would be the 2nd half of the series. So strike selection is based on where you are in the series and picking a strike that is likely to be profitable.
Too many strategies. Can we always work with one strategy, or all have to be applied.
Also, need to understand on Elliott waves.
Thanks
I’d suggest you keep a few strategies handy and learn them really well.