Nifty moves 100pts down and a strangle increases 10pts. Ways how options would react: 1) Cal only falls 2pts, put increases 12pts. 2) Cal falls 6pts, put increases 16pts. 3) Cal increases 1pt, put increases 9pts. Same result, but all scenarios have different meaning. (1/3)
Though the meaning can change quickly, so it's best to follow the market. Interpretation: 1) The most common outcome. Nifty will come back & the strangle would fall back. 2) Nifty will fall more with trend downwards. 3) Nifty can move either way, with a volatile move. (2/3)
My system would also look at the ATM straddle to decide whether to hold the strangle, convert to another strategy or get out. It isn't complicated as it looks like. With regular practice, the thinking process is minimised & the actions occur automatically. Just like Zen. (3/3)