As we see more downside potential on this pair as the bulls could not hold onto the recent peaks of 1.5914 but further to break below neckline at 1.5100 and claims more dips breaking important supports at 1.4949 levels to signify more weakness with both leading and lagging indicators to converge this selling pressure. Hence, we could foresee southward journey, probably below 1.45 sooner.

When we are strategising hedging frameworks, we came across the implied volatility of 1W ATM contracts are spiking higher than 16.7%, the rationale is that any potential downswings should be optimally utilized to maximum extent, so to participate in that downtrend, weights in the portfolio should be increased with more put contracts.

Implied volatility is an important factor to consider in options trading, because the prices of options are directly affected by it. A security with a higher volatility will have either had large price swings or is expected to, and options based on a security with a high volatility will typically be more expensive.

This is intuitive due to the higher likelihood of the market 'swinging' in your favour. If IV increases and you are holding an option, this is good.

A smart approach to tackle this obstacle and potentially profit from volatility is to create a delta neutral position on a security that you believe is likely to increase in volatility. The simplest way to do this is to buy at the money contracts.

Delta neutral strategies are options strategies that are designed to create positions that aren't likely to be affected by small movements in the price of a security. This is achieved by ensuring that the overall delta value of a position is as close to zero as possible.

Delta value is one of the Greeks that affect how the price of an option changes. Strategies that involve creating a delta neutral position are typically used for one of three main purposes. 

• Profiting from Time Decay
• Profiting from Volatility
• Delta Neutral Values in hedging

The effects of time decay are a negative when you own options, because their extrinsic value will decrease as the expiration date gets nearer.

By writing options to create a delta neutral position, you can benefit from the effects of time decay and not lose any money from small price movements in the underlying security.

What makes ATM instrument more productive in our strategy: the delta of this instrument is here at its fastest rate and gets faster as your position come closer to the expiration date. As a result, time decay may have a relevant impact on ATM options.