ANalysis of my aug IC trade

In the beginning of the month on 2nd august - i did the analysis on the high risk width IC strategy and found selling call & put ~ 10% away from strike and taking hedge 500 points further away will give ROI of 4 to 5% - I deployed the strategy and kept adjusting the trade by moving the sell positions closer to strike every week and took additional 1% return every week.

Learnings from trade 

1. The margin when i took the trade was 60000 (base of 40K for 100 point RW + 5.3K every additional 100 point RW) and the margin requirement increased as the strike price moved closer to any side of my sell position- it is safe to assume that we would need 75K margin for 5000 point rw IC strategy

2. Through the month as i moved only the sell position closer to the strike and not the bought hedged position - the margin requirement kept increasing. Beyond 1000 points RW, there is no margin benefit of having hedge position, hence we can as well sell the hedge position and convert it to short strangle

3. Margin requirement is decided based on the risker side of the IC - suppose if one one side say PUT side if the RW is increased to 1000 points and in call side RW is maintained at 500 points. then the IC margin is decided based on the riskier side (put) RW - hence it is prudent to either do the adjustments on both sides or remove the bought position as it is anyway going to consume the margin 

4. Earlier i thought Short strangle gives better ROI but i'm not sure on this. Margin requirement is based on our already existing positions and sometimes even though we have balanced positions on both sides, it allows excess selling on one side at lower margin considering the existing position. Hence as thumb rule we can always take IC position at original levels will give better ROI than short strangle and adjusted IC positions 

5. I took short straddle based on PR sundar recommendation in sep series at 11500 CE & PE on monday (24 aug) when the nifty was at 11430 for combined premium of 450. but the nifty has shot up to 11650 by end of week (28 aug) and the combined premium is still at 450 nifty movement eating up the time decay. ROI is 28% if it expires at 11500 but short straddles are meant to exit after certain time decay and has very less POP to expire at the level we took- we can expect 10% to 15% return 

Taking short straddle is high risk high reward trade which makes us to glued to the screen and i have to be on alert all the time and keep checking the adjustment trades from PR sundar . However with sufficient capital for adjustment trades once can take this trade and blindly follow PR sundar. I think at the starting stage taking this level of high risk trade may not worth it with the base capital. Once I build risk capital of 20 lakhs - i will dedicate this for high risk high reward trades of PR sundar. Till then i will stick IC with long RW and adjust through the month for additional profit