A thread on 1n 1

A thread on 𝐇𝐨𝐰 𝐓𝐨 𝐀𝐝𝐣𝐮𝐬𝐭 𝐚 𝐒𝐭𝐫𝐚𝐝𝐝𝐥𝐞

1/n

First of all one should know when to do a straddle, ideally when premiums are good and view is 𝐬𝐢𝐝𝐞𝐰𝐚𝐲𝐬 or when you are not expecting a huge trend.
When you do place a straddle, you will have good premiums so you will be covered for a good amount of move.

2/n

Find your breakevens, and ideally delta should also be neutral.
Do not adjust until your BEP is breached or the delta exceeds (+/-)40, whatever happens first, generally delta limit will breach first.
When delta reached lets say -40 it means you have to roll puts.

3/n

Just book profits in the current short put and roll put up by matching the premiums, delta should again be close to neutral but one can choose to have a little -ve delta since if there is mean reversion, PEs will spike.
This means you will be going Inverted(Short ITM)

4/n

Keep repeating the same process until expiry OR till either one option reaches 100 delta which will mean that you basically are short/long one future lot.
As soon as any option reaches 100 delta, just book the straddle be it in loss or profit, dont adjust at all.

5/n

While doing this keep in mind a loss limit(1-2% of cap), just get out if loss gets out of hand. “You cant play if you dont have chips”
If you want a video explanation check this Hindi video out on my YouTube channel https://t.co/dO0XkuVtWG

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