Traders & Investors Paradise

The Iron Fly is nicely placed in the center. The BEPs are far off. After the FOMC meeting, the IVs will cool down which should lead to decent profits.

The Futures Ratio trade is showing a good profit of about Rs 67000 at present without any incremental adjustments. I intend to square off the trade tomorrow because the next day is the FOMC meeting which may create unmanageable volatility. I will shift the capital to some other trade.

The Bank Nifty is presently at 41100. The trade is quite comfortably placed. I don't want to roll down the short calls because the market is looking bullish and also there is huge premium remaining in the 42000 Calls.

Initially I had a short straddle in the Nifty at 17600 intending it to be an intraday trader. When the Nifty dropped to 17500 I added another straddle. Thereafter, I decided to buy the legs and carry it overnight as an Iron Fly.

The Bank Nifty dipped further to 40500 and came close to the BEP. Instead of moving the Call shorts closer, I added a Put Calendar. This extended the lower BEP to 40400. On Monday or Tuesday, I will roll down the Call shorts if there is no bounce.

The Bank Nifty has softened a bit. My option is to either roll down the short calls or to add more quantities. As I am flush with funds, I chose to add more rather than rolling down. If the Bank Nifty comes closer to the BEP, I will either roll down the short calls (depending on the premium remaining) or add a Put Calendar to extend the lower BEP.

I had bought Futures to salvage a naked Call short in the expiry of 15th September. The Call expired worthless and so I decided to shift the Call to the next expiry. I also sold a 42000 Call as additional precaution. This makes it a ratio spread with a lower BEP of 40700 and a higher BEP of 42800.

After breaching the ATH of 41800, the Bank Nifty took a breather and plunged to 41100. At the present level, my Iron Fly is in a profit. It is best to sqaure off because there are too many positions and it is not manageable if there is a sudden move either way.

The Iron Fly got into trouble from the very start because the Bank Nifty surged to 41600. To salvage the situation, I added a straddle at 41300 and also moved the 40800PE to 41300. When even this BEP was at risk, I added a Call Calendar of 41400CE Sept and 41800CE of 15th Sept.

The IV is high. Tomorrow is the expiry. So, I set up a new Iron Fly with 40800 as the straddle.