Ratio Strangle
Sell 2 options, buy 1 protective
Positions in Chart: Sell 1 lot of 26000 CE + Sell 1 lot of 25600 PE + Buy 1 lot of 25800 CE. Spot price: 25800
Setup
Sell OTM Call + Sell OTM Put + Buy ATM option
When to Use
- Low volatility expectation with some protection
Market Outlook
Volatility Expectation↘Expected to Fall Sharply
Price Direction→Expected to Stay Flat
Risk & Reward
Breakeven PointComplex multiple breakevens
Max Contract LossUnlimited in one direction
Max Position LossUnlimited
Strategy Details
Complexity LevelHigh Risk
DirectionNeutral - Not much move
VolatilityFall
Number of Legs3 Leg
Strategy TypeCredit
Hedging CapabilityNo Hedging or Naked
Description
A ratio strangle involves selling both a call and put while buying one option for protection
Example
If NIFTY is at ₹25,800, you sell a ₹26,000 Call, sell a ₹25,600 Put, and buy a ₹25,800 Call for protection.
This information is for educational purposes only and should not be considered as financial advice. Always consult with a qualified financial advisor before making investment decisions. Data is constructed and is not actual. Calculations may have errors.
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