Market View
Range-bound, Not moving
Implementation:
Sell a Put below spot price(OTM), buy a Put below Sell with smaller premiuum. Sell a Call above the spot price(OTM), buy a call above sell with very small premium.
- Sell 1 OTM Put option (Leg 1 - LS)
- Buy 1 OTM Put option wuth samller premium(Leg 2 -LS)
- Sell 1 OTM Call option (Leg 3 - HS )
- Buy 1 OTM Call option with smaller premium (Leg 4- HS )
Key trigger points:
- Net Credit = Sell Premiums - Buy Premiums
- Lower Breakeven = PE Sell Strike - Net Credit
- Upper Breakeven = CE Sell Stike + Net Credit
- Max Profit = Net Credit (Between Put sell and Call sell)
- Lower Max Loss = Spread(PE Sell Strike - PE buy strike) - NC
- Upper Max Loss = Spread(CE buy strike - CE Sell Stike) - NC