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Is 9:20 Straddle a Profitable Strategy?

Hey there! Have you ever come across the 9:20 straddle strategy? It's quite popular among traders, but the big question is, does it really make money?

Let's break down the 9:20 Straddle:

The 9:20 straddle is a trading trick where you sell both a call and a put option at the same strike price on NIFTY or BANKNIFTY. The strike price is usually the same as the current market price. The interesting part is that you do this at 9:20 AM, just 5 minutes after the market opens, and close it at 3:15 PM.

Now, how does it actually work?

Well, the 9:20 straddle aims to make a profit from something called "intraday theta decay" between 9:20 AM and 3:15 PM. That's just a fancy way of saying that options tend to lose value slowly as they approach their expiration time.

To play it safe, you enter the trade at 9:20 AM when the market can be a bit wild due to volatility. And you exit the position by 3:15 PM to avoid those crazy market swings that often happen in the last 15 minutes of trading.

But here's the catch:

You need to set up a "stop loss," which is like a safety net to limit your losses. Most traders go for a stop loss of around 20% to 40%, but it's essential to adjust it based on your own risk tolerance. Too narrow, and it might get triggered too often; too deep, and you could face big losses on highly volatile days.

Also, you want to set a "target profit" higher than the stop loss. That way, you give yourself a chance for some gains. If the target is lower than the stop loss, you might end up losing more on trades that don't go your way.

Now, the big question: Is the 9:20 straddle strategy profitable?

Well, it can be, but like many trading strategies, it comes with risks. If the market takes a strong swing in one direction, you might experience losses. But don't worry, you can manage this risk by having a clear stop loss and good risk management practices.

To see how it performs, some folks tested the strategy on NIFTY options using a tool called Streak. You can check out the results here:

But remember, before jumping in with real money, try it out on paper first! Streak lets you paper trade any strategy, so you can see how it works without risking your hard-earned cash. And always do your research and backtesting, rather than relying solely on social media screenshots.

So, while the 9:20 straddle can be profitable in theory, it's essential to be cautious because it can be pretty risky too. Happy trading! 😊

You can also check this - 17 Ready to use Zerodha Streak Strategy
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