07
Jun
11

Short strangle in Sun TV

I entered into short strangle in Sun TV with selling 180 Put and 400 Call for June series. It simply means that I don’t expect Sun TV to move beyond 400 and below 180 during June. Strangle is a simple option strategy where one hold position in both a Call and Put of same series but with different strike price. Normally this strategy is useful when you expect large movement in underlying but not sure of its direction. Short strangle is when you sell Call & Put whereas Long strangle is when you buy Call & Put. Apart from price movement in case of short Strangle one is also bearish on Implied Volatility(IV’s).

Payoff diagram for short strangle in Sun TV (sold 180 put, sold 400 call):

My returns from this trade are 5.61% in 28 days. Upside looks far more capped in Sun TV, hence I have also sold three 380 Call for June series.

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