Nifty 5100 Straddle Dec

[rgbhushan]

Hi ...
5100 straddle dec'09.....
can some one guide on it ...i bought it for 266 on tuesday ....it seemed too cheap ..but the vega seems lost for last 3 days and the position is not moving either way...i want to carry it further even untill this monday .....

ur comments ...

Bhushan ,
Nagpur

 

[Capricorn]

Do you mean the theta??? since you are referring to 3 days?

 

[rgbhushan]

no Capri ...I mean the volatility sum is still 45 ...which normally should go up ...to leave me profits..

bhushan

 

[praveen taneja]

no Capri ...I mean the volatility sum is still 45 ...which normally should go up ...to leave me profits..

bhushan

From monday bro time decay will start impact on that and u will see your stradle shrinking slowly slowly 265-255-245-235 :thumb:
u must know the strategy to exit that for that search AW10 he is the right person to tell now what to do:thumb:

 

[Capricorn]

no Capri ...I mean the volatility sum is still 45 ...which normally should go up ...to leave me profits..

bhushan

But mate , vega tends to decrease as time passes and volatility has been down for the past 3 days. Hard luck there.

 

[AW10]

Bhushan, For Long Straddle to work,
- Mkt needs to make big move and thats too as soon as possible
- Volatalitiy shd increase

3 days back when u bought straddle, volatility i.e VIX was around 30 whcih has come down to 25 now. So u bought when it was high vol.. (wrong time to buy from vol perspective).

If mkt doesn't move, then the time decay will hurt u twice cause u are hold 2 long positions.

Plz understand disadvantages of long straddle
- time decay hits you at double pace
- volatility decay will hit u
- and one leg will always be looser

now think of the position of the person who has sold u this straddle.
He must be happy cause all of above disadvantages are working in his favour.

Happy Trading