«If stability is given, then post the market volatility around the event, eventually markets are going to pick up, that is what I think. And the positioning also may end up looking like that because right now to the surprise of many the FII positioning ended up being extremely short,» says Rohit Srivastava, Strike Money Analytics & Indiacharts.
I want to play the long trade. My assumption is that BJP would come with clean majority, unlike what the Street is thinking right now and I want to play a long trade. Naked futures may not be a great idea. So, how should I play it on the options and then we will do the flip side; if I believe that no, they may actually come with very weak numbers or the performance may not be that good. I want to play the short side, so on both sides what should be the right trade?
Sometimes if one thinks about this and if we keep both options open of getting the majority, not getting the majority and I am saying BJP standalone, then you would end up buying a straddle.
But then in this situation, what happens is and what we have seen in both the past elections is that IVs drop within the next three days of the election results by almost half.
So, imagine the IV, which is currently 23, goes back to 12 or 13 and that means immediately you get a