IRONFLY ON EXPIRY TRADE JUNE 10 2021

 

Iron fly is an options strategy where u have a straddle option position with ATM put and call sold along with a hedge position bought on either side with far OTM put and calls.

On the expiry all premiums within the range of strikes will expire in zero price and this theta decay on the last day is what you benefit from. 

For the risk reward to be favourable the hedge positions need to be bought at beak even point strikes.

options gamma effect could come into play in the afternoon so an entry by 10 am and exit before 1:30 is ideal and target not more than 30-40% of max profit.

Position size lots as per your capital and risk appetite. 

No need to put stop loss as risk is defined .

The margin benefit are another reason for going with such option strategies as against naked option selling or straddles but need to be care full to exit sell positions first before exiting buy position to avoid peak margin issues exit.

This post is not a recommendation and only for educational purpose .This options strategy works most time if done properly. you could backtest yourself on stockmock.in and consult your financial advisor before you put your money on it.