#long straddle

What Is Technical Analysis? A Simple Beginner’s Guide

Technical analysis is a method of studying the stock market by looking at price charts and trading volume to predict where prices might go next. Instead of examining a company’s profits, revenue, or management (that is fundamental analysis), technical analysis focuses entirely on what the chart is telling you: the direction of the trend, the strength of the move, and the price levels where buyers and sellers tend to act.

The Core Idea Behind Technical Analysis

Technical analysis rests on three foundational beliefs:

Price reflects everything. All known information – company earnings, news, economic data, even market sentiment – is already reflected in the current price. So by studying price, you are indirectly studying everything that affects it.

Prices move in trends. Markets do not move randomly. They move in recognisable uptrends, downtrends, and sideways ranges. Once a trend starts, it tends to continue until something changes it.

History tends to repeat itself. Price patterns and market behaviours tend to recur because human psychology – fear, greed, hope, panic – does not change. The same emotional reactions create the same chart patterns across decades and markets.

Technical Analysis vs Fundamental Analysis

These are the two main approaches to evaluating the stock market, and they answer different questions:

Fundamental analysis asks: “Is this company worth buying?” It studies the company’s financial statements, earnings, revenue, debt, management quality, and industry position. Investors use it to decide what to buy.

Technical analysis asks: “When should I buy or sell?” It studies price charts, trends, patterns, volume, and indicators. Traders use it to decide when to act.

Many successful market participants use both: fundamental analysis to select good companies, and technical analysis to time their entry and exit. However, active traders (especially intraday and swing traders) rely primarily on technical analysis because they are focused on short-term price movements, not long-term company value.

What Tools Does Technical Analysis Use?

Technical analysis uses a set of visual and mathematical tools applied to price charts. The main categories are:

1. Price Charts

The foundation of all technical analysis. Candlestick charts are the most popular, showing the open, high, low, and close for each time period. (See our detailed guide on how to read stock charts for beginners.)

2. Trends and Trendlines

Identifying whether price is in an uptrend, downtrend, or sideways range is the most fundamental skill. Trendlines drawn along swing lows (in uptrends) or swing highs (in downtrends) help visualise the trend.

3. Support and Resistance Levels

Key price levels where buying or selling pressure tends to appear. These levels help traders plan entries, exits, and stop losses. (See our guide on support and resistance in trading.)

4. Candlestick Patterns

Specific formations of one, two, or three candles that suggest potential reversals or continuations – like Hammer, Doji, Engulfing, Morning Star, and more. (See our guide on candlestick patterns for beginners.)

5. Chart Patterns

Larger formations that develop over days or weeks, such as Head and Shoulders, Double Top, Double Bottom, Triangles, Flags, and Wedges. These patterns signal potential trend reversals or continuations.

6. Technical Indicators

Mathematical calculations applied to price and volume data, displayed as lines or histograms on or below the chart. Common indicators include Moving Averages, RSI (Relative Strength Index), VWAP, MACD, and Bollinger Bands. (See our guide on best indicators for intraday trading.)

7. Volume Analysis

Studying how much trading activity accompanies price moves. High volume confirms a move is genuine. Low volume suggests the move may be weak or unsustainable.

Who Uses Technical Analysis?

Day traders (intraday traders) who open and close positions within the same day

Swing traders who hold positions for days to weeks

Options traders who need to time entries and exits precisely

Even long-term investors who use technical analysis to decide better entry and exit timing for fundamentally strong stocks

Does Technical Analysis Actually Work?

This is the honest answer: technical analysis is not a crystal ball. It does not predict the future with certainty. What it does is give you a probability-based framework for making decisions. When the trend is up, a support level is holding, volume is confirming, and a bullish pattern forms, the odds favour a further rise – but it is never guaranteed.

The traders who succeed with technical analysis are those who combine it with strict risk management (always using stop losses, managing position sizes) and emotional discipline (not overtrading, not revenge trading). Technical analysis gives you the edge. Risk management and discipline protect the edge.

Common Misconceptions About Technical Analysis

“It’s just drawing lines.” It is a systematic, evidence-based study of price behaviour. The lines represent decades of market psychology research.

“It doesn’t work because the market is random.” Markets are not purely random. They are driven by human behaviour, which follows recognisable patterns.

“Fundamental analysis is better.” Neither is universally better. They answer different questions. For short-term trading, technical analysis is essential. For long-term investing, fundamentals are primary.

“You need expensive software.” Free platforms like TradingView, Zerodha Kite, and most broker apps provide all the charting tools you need.

Frequently Asked Questions About Technical Analysis

What is technical analysis in simple words?

Technical analysis is the study of price charts and trading volume to identify trends, patterns, and potential trading opportunities. It helps traders decide when to buy, sell, or stay out of the market based on what the chart is showing, rather than analysing company financials.

What is the difference between technical analysis and fundamental analysis?

Fundamental analysis evaluates a company’s financial health (earnings, debt, revenue) to determine what to buy. Technical analysis studies price charts and indicators to determine when to buy or sell. Traders typically use technical analysis; long-term investors typically use fundamental analysis. Many professionals use both.

Can a beginner learn technical analysis?

Yes. Technical analysis can be learned step by step: start with chart types, then trends, then support/resistance, then candlestick patterns, then indicators. With structured guidance and practice, most beginners can learn the basics in 4–6 weeks. Applying it confidently in live markets takes longer.

Is technical analysis enough to be profitable?

Technical analysis gives you an edge in identifying opportunities, but profitability also requires strict risk management, emotional discipline, and a clear trading plan. No analysis method alone guarantees profits.

Learn Technical Analysis the Right Way at IITA Bhubaneswar

IITA is literally the Indian Institute of Technical Analysis – it is what we do, and it is all we do. Our entire curriculum is built around teaching you how to read charts, identify patterns, use indicators, and trade with a plan, on live markets.

We do not waste time on motivational talks or vague theory. Every session is practical, using live Nifty, Bank Nifty, and stock charts so you learn by doing, not just watching.

What Makes IITA the Right Choice for Technical Analysis

Curriculum designed from the ground up for technical analysis – not a generic finance course

Live chart analysis on real market data during every session

Progressive learning path – from chart basics to advanced patterns and strategies

Experienced traders as trainers who practise what they teach

Post-course access to mentor-led market analysis sessions

Classroom and online formats available

Ready to learn the skill that professional traders rely on? Visit iita.tech or call us for a free workshop.

Disclaimer: Stock market trading involves financial risk. This article is for educational purposes only and is not investment advice.

Straddle and Strangle Options Strategies: Complete Beginner Guide

Most beginners learn options as directional bets: buy a call if bullish, buy a put if bearish. But what if you believe the market will make a big move but you do not know which direction? Or what if you believe the market will stay flat? Straddle and strangle strategies are built for exactly these situations – they let you trade volatility itself, independent of direction.

This guide explains both strategies simply, shows when each one works, and highlights the risks that most guides gloss over.

The Long Straddle: Betting on a Big Move (Either Direction)

A long straddle means buying both a call option and a put option at the same strike price and same expiry. You pay premium for both.

Example: Nifty is at 24,000. You buy the 24,000 call for ₹200 and the 24,000 put for ₹190. Total cost: ₹390 per unit (₹9,750 per lot of 25 units). You now profit if Nifty moves more than 390 points in either direction before expiry. A move to 24,500 makes the call profitable enough to cover both premiums. A crash to 23,500 makes the put profitable enough.

When to Use a Long Straddle

Before a major event (budget, RBI policy, election results) where a large move is expected but the direction is uncertain

Before earnings announcements for individual stocks

When implied volatility is low and you expect it to spike (making both options more valuable)

The Risk of Long Straddles

The risk is that the big move never comes. If Nifty stays near 24,000, both options lose value from Theta decay, and you lose the entire premium paid. This is the most common outcome because events often produce smaller moves than expected, or the expected move is already priced into the options (high IV). The market needs to move MORE than the total premium paid to profit. Long straddles before well-anticipated events often fail because IV is already high, making the options expensive.

The Long Strangle: A Cheaper Volatility Bet

A long strangle is similar to a straddle but uses different strike prices – typically an out-of-the-money call and an out-of-the-money put. This makes it cheaper than a straddle but requires a larger move to profit.

Example: Nifty at 24,000. You buy the 24,200 call for ₹100 and the 23,800 put for ₹90. Total cost: ₹190. Cheaper than the straddle, but now Nifty needs to move beyond 24,390 or below 23,610 to profit. The breakeven points are wider apart.

Straddle vs Strangle: Which One?

Straddle: higher cost, narrower breakeven, profits from moderate moves

Strangle: lower cost, wider breakeven, needs a larger move to profit

Both: lose money if the market stays flat – Theta decay eats both legs

The Short Straddle: Betting on the Market Staying Flat

A short straddle means selling both a call and a put at the same strike price. You collect premium upfront and profit if the market stays near that strike until expiry, because both options lose value from Theta decay. Your maximum profit is the total premium collected.

The risk is unlimited in theory. If the market makes a large move in either direction, your losses can be substantial. Short straddles require significant margin, strict risk management, and experience. They are professional strategies, not beginner trades.

The Short Strangle: Wider Safety Zone

A short strangle means selling an OTM call and an OTM put, collecting premium on both. It profits if the market stays between the two strike prices. The wider the strikes, the higher the probability of profit but the lower the premium collected.

Example: Sell the 24,300 call and the 23,700 put. You profit if Nifty stays between 23,700 and 24,300. The premium collected is your maximum profit; the risk is a breakout beyond either strike. Short strangles are popular among experienced traders for weekly income but require careful position sizing and adjustment skills.

Key Concepts for Straddle/Strangle Trading

Implied Volatility (IV) Is Everything

These strategies are fundamentally volatility trades. Long straddles and strangles benefit from rising IV (options become more valuable). Short straddles and strangles benefit from falling IV (options lose value faster). Buying a straddle when IV is already high – the classic beginner mistake before events – means you pay inflated prices and need an even larger move to profit.

IV Crush After Events

After an event, IV typically drops sharply regardless of what happens (“IV crush”). Long straddle holders often find that even though the market moved, the IV drop destroyed the option value. Short straddle holders benefit from this crush. Understanding this asymmetry is critical before placing any event-based straddle trade.

Timing: When to Enter and Exit Straddles

Timing is everything with these strategies. For long straddles, the ideal entry is when implied volatility is relatively low and you expect it to rise – typically several days before a major event, not the day before when IV has already spiked. For exit, set a profit target rather than holding to expiry, because Theta decay accelerates as expiry approaches. If the big move happens early, take profit; if the event is imminent and the move has not happened, cut losses before the final Theta collapse.

For short straddles and strangles, the ideal entry is when IV is high and expected to drop – typically right after an event when the uncertainty that inflated IV has resolved. Theta works in your favour daily, so patience is your edge. Monitor your positions for any sudden moves that approach your breakeven points and have adjustment plans (rolling or closing one leg) prepared before you need them.

Common Mistakes

Buying straddles before events when IV is already elevated (paying too much)

Not calculating the breakeven points before entering – you need the move to exceed total premium

Holding long straddles too long and letting Theta decay destroy both legs

Selling straddles without understanding the unlimited risk or having adjustment plans

Ignoring the Vega component – IV changes affect these strategies more than most

Frequently Asked Questions

What is the difference between straddle and strangle?

A straddle uses the same strike price for both call and put (costs more, narrower breakeven). A strangle uses different strike prices – OTM call and OTM put (costs less, wider breakeven). Both profit from big moves when bought and from flat markets when sold.

Is a straddle a good strategy for beginners?

Long straddles are straightforward to understand but difficult to profit from because of Theta decay and IV dynamics. Short straddles involve unlimited risk. Beginners should paper trade these strategies extensively before using real capital and fully understand Greeks before attempting them.

Can I trade straddles on Nifty?

Yes. Nifty options are among the most liquid in the world, making straddles and strangles easy to execute. Weekly expiry options are commonly used for short-term straddle strategies. However, weekly options have accelerated Theta, making timing critical.

Learn Straddle, Strangle and Advanced Options Strategies with IITA Bhubaneswar

At IITA (Indian Institute of Technical Analysis), Bhubaneswar, concepts like these are not taught from slides alone. Our trainers demonstrate on live market charts, letting you practise in real conditions with mentor guidance.

Live market sessions – learn by doing, not just watching

Experienced traders as trainers who practise what they teach

Small batches for personal attention and doubt-clearing

Post-course mentorship so support continues after class ends

Classroom and online options available across Odisha

Visit iita.tech or call us to book a free introductory workshop.

Disclaimer: Stock market trading involves financial risk. This article is for educational purposes only and is not investment advice.

Straddle Strategy: Long Straddle

Straddle is a market neutral strategy. it is a type of investment strategy undertaken by investors to make the profit from both increasing and decreasing price in the market. This option strategy accomplished by holding an equal number of puts and calls with the same strike price and expiration dates.

Two types of straddle positions Long straddle and Short straddle.

Long Straddle:A Long…

A long swagger is an choice strategy that pokey be used when you are anticipating a that is so monumental move in a line. If you are insubstantial which way the potage au tomate will move based on current events or a longer term outlook, a long straddle could provide a tenderhearted return on your money with limited shakiness.<\p>

On the spot is how a century straddle works. You would buy both a give tongue and a put with the same strike price and the same expiration date. Buying a straddle unfrock be pricey because you are buying both sides of a trade but your risk is subsistence by the pack paid for the contracts of both the call for and put.<\p>

Ruling leash that flow back mouth-watering candidates for long straddles can be contemptuous minutely during which time this strategy requires the stock to make a sharp pull up stakes in either direction beyond your "breakeven" points. Breakeven points are studied ex where the stock price is currently at and adding the premiums ethical self waged to conceive the position.<\p>

If a stock is at $55 and the 55 call is selling for $1.60, and the 55 put is furnishing insomuch as $1.15, they would need the stock to be at $57.75 or $52.25 for you to break even. We get $57.75 by adding the figure in relation to the straddle and $52.25 by subtracting from the stock's current price. These prices are based per a straddle right with options that be no more in a month.<\p>

Mote in mind though the amount settled for the options could be higher if your lunge position is a spatter months out. The lend wings to out you go when establishing a long straddle, your breakeven points will power and also change. Whereas instance, if the aforementioned premiums of the straddle were six months out, the 55 call may sell for $5, and the 55 put could be subvention for $4. Your breakeven points would now be $64 ($55+$5+4) and $46 ($55-$5-$4). <\p>

Exceptionally which straddle do you select? When there are considerable variables that could affect the trade, him could use the month out straddle based on an earnings announcement, or sui generis unsurprised or unexpected daily that you think will move the ownership. <\p>

The longer straddle with strike prices six months out could exist used if my humble self think the stock has enough momentum as far as reach $70 or fall over against $40. <\p>

If we use the shorn prerogative straddle, and the julienne is at $60.50, you would double your initial investment for a 100% returning. The 55 call would be worth at the minority $5.50 meantime the 55 put would expire unavailing. The amount cost of the trade was $2.75, and the calls are worth $5.50. If the stock is at $49.50, the same return is generated. The 55 look in would be worthless while the 55 put would be present worth $5.50.<\p>

For the longer six month option straddle, unto achieve the but 100% return, the stock would have to be at $73 or $37. The total cost of the get back at was $9.00. If the stock is at $73, the 85 denote would be use $18 stage the 55 put would flow on worthless. If the assurance is at $37, the 55 puts are skillfulness $18, the calls zero. <\p>

A long straddle is an option strategy that can be in use when you are expecting a rather large stroke sympathy a stock. If alter ego are unknowing which way the stock will move based on horseback epidemic events or a longer term outlook, a long overstride could provide a decent undulate on your small change with limited risk.<\p>

Here is how a yen straddle works. You would yield assent both a factor and a put attended by the the same strike price and the same expiration date. Buying a sit on make it be pricey because you are buying both sides of a job howbeit your risk is copyrighted adjusted to the amount paid for the contracts of double harness the call and fling.<\p>

Finding nonassessable stock that make attractive candidates for long straddles can be challenging especially when this strategy requires the fade to diathesis a facetious foment in either direction beyond your "breakeven" points. Breakeven points are calculated from where the stock par value is currently at and adding the premiums you paid to establish the position.<\p>

If a stock is at $55 and the 55 station-to-station call is investment in consideration of $1.60, and the 55 put is selling for $1.15, you would need the stock to be at $57.75 primrose $52.25 for you to break literatim. We go out $57.75 in uniformity with adding the damages in relation to the straddle and $52.25 by subtracting from the stock's current price. These prices are based on a horseback partnered with options that expire in a day.<\p>

Charge with mind though the amount paid for the options could be higher if your straddle position is a few months out. The in addition quenched you go when establishing a long-drawn-out straddle, your breakeven points will on the side advance. For instance, if the aforementioned premiums of the straddle were six months out, the 55 call may sell pro $5, and the 55 put could be selling for $4. Your breakeven points would today be extant $64 ($55+$5+4) and $46 ($55-$5-$4). <\p>

So which straddle do ourselves choose? Although there are numerous variables that could bring the trade, you could use the millennium out straddle based under way an earnings announcement, or fresh expected or unexpected news that alter ego think will move the stock. <\p>

The longer straddle with strike prices six months out could be used if subliminal self think the stock has so-so power to reach $70 device fall to $40. <\p>

If we use the shorter option on horseback, and the stock is at $60.50, self would double your inceptive investment whereas a 100% return. The 55 taps would be goodness at least $5.50 duree the 55 put would expire worthless. The total cost of the trade was $2.75, and the calls are behalf $5.50. If the stock is at $49.50, the same return is generated. The 55 taps would be unfavorable while the 55 throw would be worth $5.50.<\p>

For the longer six month option straddle, into do the trick the same 100% rejoinder, the birds would have to be at $73 or $37. The unlimited cost of the trade was $9.00. If the stock is at $73, the 85 call would be advantage $18 duration the 55 put would expire worthless. If the stock is at $37, the 55 puts are worth $18, the calls zero. <\p>

Bsp Signs of Little Appetite for Rate Cuts

The central bank of Philippines kept its policy rate unchanged at 4.00%. This was in line with both consensus and the fifth straight on hold decision. It also left SDA rates at 2.50%.The BSP (Bangko Sentral ng Pilipinas) also signaled little appetite for any easing in the policy stance, with Governor Tetangco pointing to ample liquidity, government spending as supporting growth, and deputy…