What is straddle index in Quantsapp?

Short Answer

The Straddle is an extremely common Options strategy that is widely used by traders. A straddle can be implemented when the market is expected to make a big move in either direction or remain sideways. The straddle Index in Quantsapp is an indicator that provides all of the important data points that are required to execute a Straddle strategy.

Detailed Answer

What is Quantsapp?

Quantsapp is an online Options trading analytics platform that provides various tools and indicators for options traders. Quantsapp provides many features such as Trap Indicator, Open Interest Analysis, Options Chain, etc. One of its unique features is the Straddle Index.

Before looking at what is the Straddle Index Quantsapp, let's first find out what is a Straddle.

Straddle

A straddle is an Options strategy that involves buying or selling both, a Call option as well as a Put Option of the same Strike price, at the same time and of the same underlying asset. A straddle can be implemented in two different ways, 1. Long Straddle, 2, Short Straddle.

Both these strategies are executed in different situations. A long straddle is used when the underlying asset is expected to make a big move in either direction. On the other hand, Short straddles are used when the underlying is not expected to make a big move. This is employed when the general sentiments are neutral or within a range.

What is Straddle Index in Quantsapp?

The Straddle Index in Quantsapp is an indicator that shows many factors of a Straddle on a particular stock or index. For example, Nifty, ITC, Reliance Industries, etc. The dashboard of the straddle index is shown below.

straddle index (1).jpg

As the above image suggests, The Straddle Index by Quantsapp has a total of 6 parts that makes up the overall indicator. While implementing a Straddle strategy, an options trader needs to look at some important data points. Quantsapp has integrated all the necessary features in one place. Some of the important data points include:

  1. LTP (Last Traded Price) & CNG (Change): These two denote the last traded price of the Call & Put Option of a strike price and the overall change in price throughout the day.
  1. Strike: The term “Strike” denotes the strike price at which the straddle has to be deployed. In the above chart the underlying asset has been taken as Nifty. Therefore all the strike prices are displayed from which one can select any one according to their needs.
  1. Straddle: Under this section, the summation of the Call & Put options of individual strike prices is shown. This gives an idea to the trader, to take a position based on the overall price.
  1. CNG (Change): The change in the total straddle price within a day is denoted under the CNG section. This indicator makes it clear to the traders whether to deploy a long or short straddle.
  1. IV: The IV or Implied Volatility is another main factor when it comes to Options. The IV denotes the rate of change in a particular option price. A low IV is usually good to deploy a Short Straddle whereas a high or increasing IV might be a good time to deploy a Long Straddle.

Conclusion

The Straddle Index is a good tool for options traders as it provides various parameters of Straddles within one window. By following the above methods one can denote the approx margin money and the total Profit & Loss by analyzing the IV and change in the Straddle price.

Tagged With: QuantsappOptions TradingStraddleDerivatives
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