Long Straddle Options strategy - Stock market technical analysis #shorts #krinu

Long straddle is an option trading strategy implemented by traders when they are expecting a strong move in the market (here the nifty is the underlying asset) this move can be upward or downward movement or extremely Bullish or extremely bearish , Long straddle strategy May be implemented by the traders when they are expecting a news , earnings release , policy announcements , election results which they think will affect the market movement in a big way , as we have said this move can be upward or downward , or in other words when the market's volatility is too high for the underlying asset (Nifty)

Long straddle strategy is constructed by Buying Call option and Put option with the same strike value , same expiry for the same asset (here its the NIfty)

so here in long straddle the investor had specified a range between the Break even of leg-1 and Leg-2 , if nifty trades with in this range at the time of the expiry of these contracts ; he incurs loss from both the Legs or contracts

if the Nifty value raises above the Leg-1 Break even at the time of expiry ; he gains from Leg-1 , and if Nifty trades below the break even of Leg-2 at the time of expiry he gains from leg-2 , for both these instances he incurs loss from the other Leg which is offset-ted by the overwhelming profit he gets from the other one, hence in Long straddle the range specified is almost narrow since ATM options are bought to achieve this normally.

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