Option Selling Trading Strategy To Generate Regular Income [9.20 Short Straddle]

By | May 21, 2022

Do you want an option selling trading strategy that can generate regular income?

Then try this 9.20 Short Straddle option selling strategy.

We know that the market trends nearly 30% of the time and the remaining 70% of the time it traded in sideways.

That is the advantage of option sellers because premiums will decay more when the stock market stays range-bound.

However, option selling carries unlimited risk. So to mitigate the unlimited losses, you need to keep fixed stop loss.

If the market tends to remain silent, then theta decay will help you to make money. In case, it moves wildly on either side, our stop loss will protect us.

So, this option selling trading strategy is awesome to generate regular monthly income.

Check out other trading strategies:

Trend Lines Trading Strategy That Will Change The Way You Trade [Advanced]

ORB Trading Strategy: Winning Trade Set Up With 90% Accuracy

Rules of Option Selling Trading Strategy [9.20 AM Short Straddle]

You can apply this option selling trading strategy to any instruments. However, we are using BankNifty and Nifty index options only. Because index options generally have higher liquidity as compared to stock options.

Bank Nifty 9.20 Short Straddle Option Strategy

At 9.20 AM, short one lot of ATM options every day with a 25% stop loss and 50% Target on each leg.

Select weekly expiry and short both Call ATM and Put ATM. You need to choose weekly expiry and not monthly expiry as the decay is faster in weekly options.

Suppose, if you short ATM CE options at 300, then your stop-loss is 375 and Target is 150. Either your stop-loss gets hit or the target gets hit. In case both stop loss and target don’t get hit, then you exit at 3 PM.

Always remember that you need to exit only the strike that hits the stop loss and not both legs.

When tested with one lot, the returns are simply awesome.

It has ended up in profits in almost every month which has been tested from 2017 to 2022.

 

Option Selling Trading Strategy 9.20 Short Straddle backtest 2

 

Option Selling Trading Strategy 9.20 Short Straddle backtest 1

 

This strategy has given stellar returns since 2017 and remains profitable almost every month.

 

Option Selling Trading Strategy 9.20 Short Straddle backtest 3

You can also download the trade details for your reference:

Option Selling Trading Strategy 9.20 AM Short Straddle Backtested data

Category: Intraday Strategies Tags:

About Ratan Kumar

Ratan Kumar, an enthusiast stock market trader & blogger. He is the founder of akme. Forecasting stock market moves with the use of technical analysis since 2008. For the technical trader & investor, new or experienced, he provides legitimate and valuable advisory from day trading to long-term investment horizon and helped thousands of investors to make money out of the stock market.

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