Dumb Straddle Strategy:

This is an intraday Strategy on Weekly Options.

Entry:

It will sell intraday ATM options at the start of the market but since inception it is selling 5 minutes after the market start i.e. 9:20 AM to avoid the maddening volatility of market start. 

Risk Management:

It will have two stop losses.

  • One is % based stop loss i.e. it will close the trade if 20% of the premium is hit.  So, if a call options is sold at 100, then it will get squared off if the price reaches 
  • One is a time-based stop loss, i.e. It will close the trade at the end of the market. Currently, brokers initiate an automatic square-off process 30 minutes before the market closes, precisely at 15:00. This timing aligns with the heightened volatility observed during the market’s final half-hour. Consequently, we set our reference time at 14:50. In the event that the stop-loss mechanism described earlier is not triggered, it will serve as a take-profit point.

This is called Dumb Straddle Strategy because it looks like a too simple strategy based on Straddle.

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