InvestorQ : Are there some practically mantras to identify when to buy or write a strangle strategy in the F&O market?
Mahil Khan made post

Are there some practically mantras to identify when to buy or write a strangle strategy in the F&O market?

Answer
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Jignesh Gupta answered.
2 years ago


First and foremost, you must focus on stocks that have outperformed their sectors. In a volatile market, these are the most likely to benefit from volatility. Secondly, look for stocks that have trying to break out but have not succeeded in the same. These are the kind of stocks that are most likely to react to a spike in volatility.

Creating a strangle strategy is not just about identifying stocks. You also need to identify pricing. You also need to find out if the options are underpriced, fairly priced or overpriced. Most trading software offer this facility and it is fairly simple to use. It is better you consult your broker or advisor who can also advise you on the right methodology of going ahead. But the time is ripe. Strangles, if designed properly, can make money with minimal risks in this kind of a market. You have to get the timing, the understanding of the environment and the pricing range right.