Hi GMT.
CMP 6200
6400 CE 56
6000 PE 54
-----------
Total 110
One pair will fetch Rs.5500, blocking a capital of Rs.40000; That is 13.75 %
It is too good to be true because we will have to employ more capital to manage the shorted strangle till expiry. This will involve buying and selling more options. Inevitably, this will involve losses, profits and expenses.
Interesting.
There are no stock solutions to various situations that arise when you enter a short strangle. And as I have been repeatedly saying, one will get a hang of the ways of managing the trade only by practice.
A few things which I have found useful for me are:
Enter short strangle not too close to expiry. Keep track of the way trade is going on EOD basis. At any given time ensure that whatever market does ,you will not be in loss or if the loss is inevitable it should not make you jittery to the extent you will lose your cool in handling the trade.
Most important,
prepare plan of action for ongoing trades each day before market opens and make minimal changes to your plans during market hours. I have just begun following these steps and am in no way vouching for it's efficacy. However, I feel that if I religeously follow this practice I will at least avoid losses and will definately make profits later. I have no time frame in mind .
I feel that coaches like Dan and Wastej have done their job. It is for the players like us who have to use the lessons learnt in improving our game.
Happy trading,
gmt900