Study of the Application of Short Straddle Strategy in Options on Various Underlying Assets in the Indian Option Market

Titled “Study of the Application of Short Straddle Strategy in Options on Various Underlying Assets in the Indian Options Market” this study aims at studying the implication of short straddle strategy on selected 6 option contracts of 2 underlying categories. This research paper tries to explore the applicability of short straddle strategy in options. Derivatives market is one of the unexplored markets by the Indian investors, as the concentration is mostly on the stock market primarily. This paper takes into consideration an investor having limited funds but good knowledge of the markets of the underlying assets, who desires to earn a return more than the risk-free rate of return. The paper provides to such an investor with an investment pattern which caters his requirements. The study puts out the merits of short straddle strategy. It shows the applicability of the short straddle strategy on the chosen investment avenues. It has considered equity and index as the underlying and selected Tata Motors, Reliance industry, Kotak Mahindra Bank, Asian Paints in the equity segment and Nifty 50, Nifty Bank in the indices segment.