Suppose we bought banknifty option long strangle before some big event Or After a long tight range. Bought 31500 call in INR 300 premium Bought 31000 put in INR 300 premium Total investment 600 points*lot size 20=INR 12000 We are ready here for any big movement either side. Now banknifty moved from 31200 to 31500 due to some positive trigger. So call premium increased 300 to 520. Put premium reduced 300 to 120 only. Total is 520+120=640now. I expect banknifty to go 32000-33000 from today 31500level in near future. But there will be profit booking after every upside move. So if there is a technical correction of 150-300 points only(0.5 to 1%) What will happen? Call will reduce to 50-60% 520 to 230 Put will increase by 50-70% 130 to 200 Because now put has become far out of money. So total is 200+230=430 now. 210points less than previous day total. We need to re balance the position. So sell that long strangle,both call put in 640. And buy a new combination with latest perspec...
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