An option butterfly strategy can be used to bet on underlying volatility.
Underlying NIFTY returns
Traders have to make sure that the underlying returns are volatile enough to generate a profit selling butterflies.
A simple back-test
Sell the closest expiry butterfly at each expiry.
Does the same thing work for the BANKNIFTY?
A BANKNIFTY back-test.
Avoiding huge losses
A 10-point stop-loss that kicks in 10-days before expiry.
Avoding the baking-in phase
Entering the trade 10-days after previous expiry to reduce uncertainty.
Single-stock option short-call butterflies
Using momentum to drive a short-call butterfly strategy holds promise.