The Top 2 F&O Trading Strategies Following Election Results: Shubham Aggarwal

 The Top 2 F&O Trading Strategies Following Election Results: Shubham Aggarwal

The Top 2 F&O Trading Strategies Following Election Results: Shubham Aggarwal

Two lucrative F&O trading methods are explained by Shubham Aggarwal after the election results.

— Shubham Aggarwal

Excitement in India VIX has already begun to build as we wait for the results of the five state elections; it is getting close to its peak for the second half of 2023. As everyone is aware, the indicative option implied volatility of the Nifty is what makes up the India VIX. Options imply that market volatility is not always the case.

Even if each of us may have made cautious wagers before to the event, it is just as crucial to have our trading plan ready for any fallout afterwards.

I found that the next two tactics were effective in the aftermath of the occurrence.

#1 Purchasing choices sequentially

Let's say that a direction has been established, but it seems like there is still a long way to go. Taking the option purchasing approach is advised. Recall that some election outcomes have also compelled the markets to close on the positive side.

It is usually a good idea to use an infinite profit approach in such circumstances. But there is equal danger involved in purchasing and selling futures. Recall that traders are making quick purchases or sales, which contributes to the rapid movements in the market. Because of this, this maneuver is just as risky as it is unreliable.

However, as we have seen, India VIX will rise before to the event and will likely decline after it, as predicted by volatility analysts. The option premium will be under extreme pressure as a result. With no change in the stock or index, the premium falls as the event progresses. There may be a loss here that has to be covered.

Buy options in at least three tranches as a solution. Purchase the first tranche at a lower strike put and a higher strike call. Only purchase the following two lots if you are profitable.

This will facilitate both closing the acquisition and obtaining a stake in the company. We'll get a better deal by waiting, at least in terms of the risk premium. I can provide instances of calls when the index rose, but both options ended up at the same price.

#2 Creating and Marketing Protected Options for Closer Strikes

As said, because predicted volatility is projected to decline, option premiums would fall arbitrarily. Writing will so be beneficial. But today, direction—once an ally in option purchasing—is an opponent. However, there is a fix.

Offer a close-by call or put as an alternative to a far-off one. Moreover, be careful and purchase slightly lower puts or slightly higher calls.

As an illustration:

Using Stock X at 100

Avoid selling 102.5 calls and 98.5 puts.

100 calls and 100 puts are sold.

,

Purchase 95 Put/105 Call

advantages

In most cases, the premium obtained in this way will be the same or even more.

2. Less money will be invested since smaller margins provide the security that one seeks.

3. Lastly, we will always be protected from little losses even if the path takes a sharp shift in the opposite direction.