{"id":172716,"date":"2012-08-14T12:06:28","date_gmt":"2012-08-14T06:36:28","guid":{"rendered":"http:\/\/stockviz.biz\/index.php\/?p=172716"},"modified":"2012-08-14T12:06:29","modified_gmt":"2012-08-14T06:36:29","slug":"time-to-buy-volatility","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2012\/08\/14\/time-to-buy-volatility\/","title":{"rendered":"Time to buy Volatility"},"content":{"rendered":"

Now that the earnings season is over and Europe is on vacation, volatility in the NIFTY has dropped off. Here\u2019s a historical chart to put things in perspective:<\/p>\n

\"image\"<\/a><\/p>\n

With the August expirations right around the corner, you should be looking at putting on Sep 5300\/5400 Long Strangle on the NIFTY<\/a> or if you are feeling brave, buy the Sep 5000 NIFTY Puts outright. <\/p>\n

<\/p>\n

With the Strangle, you\u2019ll have some protection against melt-ups. If you look at the pay-off at expiry, you are protected if Europe gets its act together or if the domestic situation improves. With break-evens at 5,118 on the downside and 5,581 on the up, a move outside of any one of these goalposts will make you money.<\/p>\n

Whatever your strategy is, volatility seems too low at this point. So make sure you put some \u201creversion to the mean\u201d trade on.<\/p>\n

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