Bonjour, new guests from small-town India
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
If I go long straddle (selling weekly expiry), then how to hedge if the market falls suddenly in intraday
Arjun Reddy
When we execute long straddle, it essentially means we are simultaneously buying at-the-money (ATM) call and put options of the same strike price of the same underlying with same expiry date. There is no selling involved in long straddle.
This strategy is usually executed when there is an expectation of a sudden movement in the price of the underlying security but unsure about the direction. Typically, long straddles can be executed using stock options just before result announcement of a stock or executed using index options ahead of the release of a macroeconomic data that can impact the stock market.
If you intend to reduce the cost outlay of this strategy, one way is to sell a call option with higher strike price (possibly the strike price which is the nearest resistance) and simultaneously sell a put option with lower strike price (possibly the strike price which is the nearest support). This strategy is called long iron butterfly spread.
We shall see how to construct long iron butterfly with an example. Assume that you are eyeing to capitalise on the forecast price movement of stock A, which is currently trading at ₹1,500. First step is to execute a long straddle, i.e., buying call option and put option with same strike price which is ₹1,500. Suppose the nearest resistance for the stock is ₹1,700 and the immediate support is at ₹1,300. You can simultaneously sell ₹1,700-strike call option and sell ₹1,300-out option. This combination will thus become long iron butterfly strategy.
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
Citroen’s first vehicle sports a novel design and European interiors. It is also meant to be as comfortable as ...
The pandemic is only the tip of the iceberg that the country’s cash-poor airlines — both regional and national ...
The government is yet to specify the framework of its recently announced old vehicle scrappage policy
With initial public offerings galore, we give you a cheat sheet to score some good grades
Biggest risk in selling funds in a rising scenario is exiting early and missing out on further gains
Go for a standard vector-borne diseases policy if you don’t have a regular health plan
No credit risk is an attraction, but note the nuances
After facing severe droughts for several years, farmers in western Maharashtra have turned the corner through ...
A toast to a traditional drip irrigation system still going strong in the Northeast
Raza Mir’s ‘Murder at the Mushaira’ works well as a historical novel that captures the sunset years of the ...
If you see garbage lying on the streets, remove it, says a dedicated plogger on a clean-up drive
Its name is the starting point of a brand’s journey and can make a big difference in the success sweepstakes
Sober spirits are the in thing
A peek into where ad spends went last year and where they are headed tomorrow
Can Swiggy Instamart disrupt the ecommerce groceries space, currently ruled by the Amazons and Big Baskets? ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...