Long Strangle

Options Spreads Intermediate NIFTY BANKNIFTY FINNIFTY Stock Options

Direction Neutral - expecting big move either way

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Quick Reference

Strategy Type	Volatility - Long Gamma/Vega (OTM)
Market Outlook	Direction Neutral - expecting big move either way
Risk Profile	Limited to Total Premium Paid (lower than straddle)
Reward Profile	Unlimited on upside, substantial on downside
Time Horizon	Short-term around events - 2-7 days
Capital Requirement	Rs.3,000-8,000 per lot for index strangles
Best Used When	Before major events with IV Rank below 25%, expecting move larger than 1.5% to exceed breakevens

When to Use This Strategy

Before major events with IV Rank below 25%, expecting move larger than 1.5% to exceed breakevens

Payoff Diagram

Profit ▲ │\ / │ \ / │ \ / │ \ / 0 ──┼────\──────────────────────/────► Price │ \ / │ \ / Max │ \________________/ Loss │ BE1 A B BE2 │ A = Put Strike (OTM - below current price) B = Call Strike (OTM - above current price) BE1 = Lower Breakeven (Put Strike - Total Premium) BE2 = Upper Breakeven (Call Strike + Total Premium)

India-Specific Notes

Trading Hours

Best Entry	Before major events - RBI policy, Budget, Elections, Earnings
Avoid Entry	After events (IV already crushed), low volatility periods
Optimal Monitoring	During event announcements for quick decisions

Expiry Behavior

Weekly Expiry	Thursday (NIFTY, BANKNIFTY, FINNIFTY)
Monthly Expiry	Last Thursday of month
Expiry Day Tips	Strangles lose value rapidly near expiry if no move • Both options are OTM - can expire completely worthless • Need even BIGGER move than straddle to profit • Exit before expiry week unless expecting imminent catalyst

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