Sell OTM call + sell OTM put. The most-popular retail Indian income strategy on weekly options. Wider profit zone than short straddle.
Short strangle = sell OTM call + sell OTM put at different strikes. Wider profit zone than short straddle. Lower premium collected but lower probability of being challenged.
Almost certainly the single most-popular retail income strategy in Indian markets — typically deployed on NIFTY and BANK NIFTY weeklies. Same unlimited-risk concern as short straddle but with more breathing room.
Tuesday morning, NIFTY at 22,000, Thursday weekly expiry.
Sell 22,200 CE at ₹35 + Sell 21,800 PE at ₹30. Credit = ₹65 × 25 = ₹1,625 per lot.
Breakevens: 21,735 and 22,265. NIFTY must stay between these by Thursday close.
Max profit (NIFTY between 21,800 and 22,200 at expiry) = ₹1,625. Theta works for you every day until then.
Common: 0.8-1.5% OTM on both sides. Wide enough to give yourself a buffer; close enough to collect meaningful premium.
Calibrate to IV. In high-IV weeks, you can go further OTM and still collect ₹30-50 per leg. In low-IV weeks, you may need to go closer to ATM (and accept higher risk).
Symmetric. Asymmetric strangles bias the trade — usually not the intent of a pure income strategy.
Position size: 1-2 lots maximum for retail accounts under ₹10 lakh. The unlimited-risk profile means small position sizing is critical.
Stop loss: cut at 1.5-2x credit collected. So if you collected ₹1,625, cut at ₹2,500-3,250 of unrealised loss.
Time stop: if 60% of premium is collected by Wednesday, close — don't ride expiry-day Gamma risk for the final 40%.
News awareness: close before major scheduled events (RBI, Fed, election results). Don't carry short premium through known catalysts.
Win rate varies 60-80% depending on strike selection and IV regime. But each loss is 1.5-3x the size of a typical win. Net expectancy is usually positive but sharpe ratio is moderate — many winning weeks punctuated by occasional bigger losses.
SPAN + exposure: typically ₹80,000-1,20,000 per lot, less than a short straddle's ₹1.2-2 lakh per lot. Less concentrated risk = lower margin.
When you have high conviction the underlying stays in range. Strangle keeps the long-wing premium that condor 'wastes' on protection. But for any uncertain regime, condor's defined risk wins.
Yes — when one side is challenged, you can roll the threatened leg further OTM (for less premium) or roll both legs to next week's expiry. Rolling locks in some loss but keeps the trade alive.
Monday/Tuesday open typically. Premium is richest at the start of the weekly cycle; Theta hasn't started accelerating; you have 3-4 days to manage. Avoid entering Wednesday afternoon when Gamma starts ramping into Thursday expiry.