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Selling Options in a consolidating markets

Consolidating markets can be an opportunity to make returns from selling options. A consolidating market with high relative IV and high relative IV percentile can be an opportunity for weekly options on the Index.

March 06, 2021 / 09:12 AM IST

Shubham Agarwal

Markets can be trending or consolidating at times and as a trader, one should look to place their trade as an opportunist. In times when the market is consolidating, opportunities exist for making returns by selling options. With highly liquid weekly options available, forecasts of even a week’s consolidation can be converted into a trade.

Options Selling requires shorting options without owning one. The risk profile of selling naked options is unlimited, however, depending on the risk preference hedged writing can also be initiated with a trade off to reward and risk.

When to Short options?