What it does
A strangle gives the index room on both sides. A straddle gives it none: both options are sold at the current level, so any move at all starts eating the premium. In exchange, the premium is the largest you can collect.
It is a bet that today will be quiet. Some days are. The days that are not can cost several times what a quiet day earns, and the loss has no ceiling. This is the most demanding strategy on the list and it is meant for people who already sell options.
How it makes money
At 09:20 it sells the call and the put closest to the index level, on the current weekly expiry. The two premiums together are its maximum profit, earned only if the index closes the day almost exactly where it started.
In practice it never waits for that. It books a third to a half of the premium as soon as the day's decay delivers it, and it is out of the trade on any sharp move.
A worked example, in rupees
Illustrative prices with NIFTY at 24,000 at 09:20, three days before expiry, one lot of 75 units.
- Sell the 24,000 call
- collect ₹110 a unit
- Sell the 24,000 put
- collect ₹105 a unit
- Net collected
- ₹215 a unit, ₹16,125 a lot
- Break-evens
- 23,785 and 24,215
- Profit target (balanced, 40%)
- ₹6,450
- At 24,500
- a loss of ₹21,375
- At 25,000
- a loss of ₹58,875, and it keeps growing
The target is small next to the worst cases on purpose. The strategy's whole claim is that most days are quiet enough to earn ₹6,450, and that the stops keep the other days to a few thousand. The second half of that claim is what breaks on a gap.
When it does well, and when it hurts
Does well when
- Calm, directionless days, especially mid-week with no scheduled news.
- After a volatile stretch, when option prices are still high but the market has settled.
Hurts when
- Any sharp directional day. The straddle loses from the first point of movement.
- Expiry day, when prices move fastest for a given index move. The conservative and balanced versions skip it entirely.
- Events: policy announcements, results, global shocks. The careful versions stand aside the day before a scheduled one; nothing can stand aside from an unscheduled one.
What the robot does when a trade goes wrong
These are the real rules, in the order the strategy checks them. Nothing here needs you to be watching.
- 1
Takes the profit early
Thirty to fifty percent of the premium, by version. The rest is not worth the exposure.
- 2
Stops when the premium expands
At 1.3 to 2 times what it collected, which on a straddle happens after a modest move.
- 3
Stops trading for the day after a set loss
Three-quarters of a percent to one-and-a-half percent of the account.
- 4
Skips expiry day and event days
On the conservative and balanced versions. The aggressive one trades through both, which is why it is called that.
- 5
Closes everything by 15:15
Always.
Adjustments, and why it does not make them
Straddle sellers adjust constantly: hedging with the index, rolling the losing side, adding wings to turn it into an iron fly. Each is a judgement call made under pressure, which is the opposite of what a rule-based strategy is for.
This robot does none of them. It has an early target and an early stop, and it lets them decide.
The three versions
Each strategy comes as conservative, balanced and aggressive. They share the idea and differ in how much they risk once in.
| Setting | Conservative | Balanced | Aggressive |
|---|---|---|---|
| Index | NIFTY | NIFTY | BANKNIFTY |
| Takes profit at | 30% of what it collected | 40% | 50% |
| Stops when premium reaches | 1.3 times | 1.5 times | 2 times |
| Trades on expiry day | no | no | yes |
| Stands aside before scheduled events | yes | yes | no |
| Stops trading for the day after losing | 0.75% of equity | 1% | 1.5% |
Entry: At 09:20 on non-expiry days when no major event is scheduled
Action: Sell ATM Call and ATM Put (0.50 delta) on current NIFTY weekly expiry
Exits: Take profit at 40% decay, stop when combined premium reaches 1.5x, and square off at 15:15
Want a stricter filter, a different stop, or your own stock list? Open a working copy in the builder and run a backtest.
Customize this ruleRisks you should know
- Open-ended loss on both sides, with no room for the index to move at all.
- The largest margin requirement of any strategy here.
- Not published: options history is not yet on this site, so there is no backtest the quality gate could accept.
The jargon, explained
- Premium
- The price of an option. A seller receives it up front and keeps it if the option expires worthless.
- Strike
- The index level an option is tied to. A 24,000 call pays its owner only if the index finishes above 24,000.
- Expiry
- The day an option stops existing. NIFTY and BANKNIFTY have weekly expiries, and these strategies use the current week's.
- Lot
- Options trade in fixed bundles. One lot of NIFTY is 75 units at the time of writing, so a ₹40 premium is ₹3,000 per lot. Check your broker for the current size.
- Delta
- Roughly, the chance an option finishes in the money. A 0.15-delta option is about 15% likely to; the lower the delta, the further from today's level the strike sits and the smaller the premium.
- Implied volatility (IV)
- How big a move the market is pricing in. When IV is high, options are expensive, which is when selling them pays best.
- Margin
- Money your broker blocks while you hold a sold option, because you may have to pay out. It is returned when the position closes.