Thread by @KatariyaPran

Why am I buying Stock and selling Straddles against them instead of selling 2xPE? There are many reasons that I have tried to explain in some of my previous threads but what it boils down to is the difference in thinking of these two Trades

So while selling 2xPE is an opportunistic Trade for that month, my thinking with the Straddle is to invest my funds into building a portfolio of strong stocks and generate a monthly Return from them while they continue to appreciate.

I like to look at this as a long term Trade over many months where I will keep rolling the Straddle to future months for as long as the Stock remains strong. How do I gauge the suitability of the stock? In a word Relative Strength

So SBIN is a strong Stock outperforming both the Nifty 50 and the Bank Nifty. As long as it continues to do so, I will continue with this Trade. I use P&F Charts to study this. Here are the charts for SBIN

Having said so, selling Naked PE in Strong Stocks is my most frequent Trade. I am a strong believer in the law of large numbers and it's role in reducing Risk so I do as many of these Trades as possible. Generally I go with a 70%+POP with a well defined exit based on Technicals

But if I like the Stock from a long Term perspective, I will go with an ATM PE. However, I look at these Trades from a long term view with the Trade continuing over many months. There is way to do this and here is an excellent article on how to do it.
steadyoptions.com/articles/selli…

The real money comes from investing in and holding good stocks. Also Capital Gains are taxed at half the rate of Trading Income. Trading creates Income- that too limited Income. Investing creates wealth and the upside is virtually unlimited