Bank Nifty Budget Day Trade - Long Straddle OTM

Date: - 1st Feb 2021

Asset: Bank Nifty

Thesis:

It was evident that there would be a large move on the budget day based on the comments from FM (that it would be the best budget seen by India). I was expecting marketing to go down based on the hype created and the intuition that the budget will not be up to the proclaimed significance. But, I wanted to deploy a delta neutral strategy. Long straddle on Bank Nifty made sense as BN itself is a little volatile compared to Nifty and also Shorting options would be very very risky given the expected big move. As we all know the market took the budget positively and BN moved +8% intraday. Unfortunately, I was not able to hold my position mid-budget because of a lack of psychological strength and closed with a 700rs loss. But if I had kept my position till expiry, I would've made 70K on a single lot. That's a big missed opportunity that went past me because of my risk aversion mentality. It's a learning point for me to keep my emotions aside and let the trade go by itself. Entry and exit points should be decided before the execution of the trade.