Dates: March 18 to March 30
Instrument: Bank Nifty Strategy: Positional Option Selling (Dynamic Adjustments)
(You can find the verified PnL for this specific trade period on Wealthbulls.com)
If you've been trading the markets recently, you know that the final two weeks of march tested every option seller's patience, psychology, and risk management systems. What started as a standard delta-neutral positional trade quickly escalated into a fight for survival against massive geopolitical headwinds and violent volatility expansions.
Despite the market throwing everything but the kitchen sink at this position, we managed to close the series in the green. Here is a transparent breakdown of my experience, the market context, and the exact adjustments I made to protect my capital and squeeze out a profit.
The Calm Before the Storm (March 18)
I initiated the option selling positions on March 18th with a standard Short Strangle in Bank Nifty. The market context felt relatively stable, and India VIX was hovering around 18. The goal was simple: collect premium through theta decay over the coming days.
The Geopolitical Shock & Volatility Expansion (March 19 - 20)
Overnight, the geopolitical landscape shifted dramatically with news surrounding the Iran conflict.
- March 19th: Bank Nifty opened with a brutal 3.34% gap down. The market moved violently throughout the day, and India VIX shot up, closing at ~22.
- March 20th: The chaos compounded. Market swings were aggressive, and the VIX closed at a terrifying ~26.
During these two days, the option pricing models went haywire. Because the Implied Volatility (IV) spiked so aggressively, theta decay essentially vanished. The premiums on both calls and puts skyrocketed, making it incredibly painful for net option sellers.
The Whip-Saw Action (March 25 - March 30)
If the gap-down wasn't enough, the market decided to test both sides of the chain.
- By March 25th, Bank Nifty staged a massive, aggressive rally, forcing intense management on the put side.
- Just when the dust seemed to settle, the market reversed violently again, dropping a staggering ~7% from that March 25th high by the time we reached March 30th.
Firefighting: My Adjustments
You don't survive a 3%+ gap down followed by a 7% swing with a static short strangle. Active risk management was the only reason this trade remained viable.
- Strangle to Straddle: As the market trended heavily, I continuously rolled my untested legs closer to the money to collect more premium, eventually converting the initial strangle into a Short Straddle to aggressively manage the delta.
- Capping the Tail Risk: With the VIX at 26 and the overnight risk of geopolitical news becoming completely unpredictable, leaving a naked straddle open overnight was financial suicide. I bought out-of-the-money (OTM) wings to define my risk, effectively converting the position into an Iron Fly.
The Takeaway
This was easily one of the hardest trading weeks of the year. When IV spikes from 18 to 26 and the underlying swings 7% in a matter of days, the goal shifts from "making a massive return" to "capital preservation."
By relying on mechanical adjustments, capping overnight tail risk with an Iron Fly, and refusing to panic during the massive MTM (Mark-to-Market) fluctuations, I was able to navigate the storm and close the trade in profit.
It’s a perfect reminder: Option selling isn't about hoping the market stays flat, it's about how you manage your risk when it doesn't.