 "Adopt 'Short Strangle' on Nifty ahead of Budget: Sahaj Agrawal, Kotak Sec")
Nifty Strategy: Short Strangle (6FEB2025 Series)
Strategy Details:
Sell 24500 CE & Sell 21900 PE
Inflow: Rs 40
Stop Loss: Rs 74
TGT: Entire Premium Inflow
Rationale:
> Union Budget 2025 scheduled for tomorrow, led to elevated volatility.
> Implied Volatility (IV) has spiked due to uncertainty surrounding the Budget announcement.
> The immediate Support & Resistance levels are: 22,700 & 23,400.
> In this environment, a Short Strangle strategy is attractive to capitalise on: Elevated IV and Time decay (Theta). This strategy offers the potential for profits if the market remains range-bound along with a contraction in Volatility post event and Theta decay.
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Disclaimer: Sahaj Agrawal is Senior Vice President, Head of Derivatives Research at Kotak Securities. Views are his own.