Algo Trading

Algo Trading Strategy : Long Strangle

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Algo Trading Strategy : Long Strangle is executed when a trader wants to take advantage of Significant rise in a Volatility or a strong move in either direction by underline stock on some news or data.

Strategy :

BUY OTM CALL

BUY OTM PUT

NIFTY 50 Underline : 17530

BUY OTM CALL Strike 17600 : Premium Paid Rs. 92

BUY OTM PUT Strike 17500 : Premium Paid Rs. 112

When NIFTY 50 Falls to 17200

Net Profit = 17500-17200-92-112 = Rs.96

When NIFTY 50 Rises to 17900

BUY OTM CALL Strike 17600 : Premium Paid Rs. 92

BUY OTM PUT Strike 17500 : Premium Paid Rs. 112

Net Profit = 17900-17600-92-112 = Rs.96

Formula for Maximum Profit :

Price of Underlying – Strike Price of Long Call – Net Premium Paid OR

Strike Price of Long Put – Price of Underlying – Net Premium Paid

Maximum Profit : Unlimited

Maximum Loss : Premium Paid + Brokerage

ALGO Strategy Synthetic Long : Algo Strategy : Long Straddle

NSE India Options Chain Website https://www.nseindia.com/option-chain 

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