Market expert Shubham Agarwal identifies January as the most intriguing month for traders, shaped by two critical forces: quarterly results and the Union Budget tabled on February 1st. Foreign Institutional Investors start positioning themselves after New Year, while traders across all levels begin placing bets on policy decisions based on available information and experience.

January Market Characteristics

During January, market trends become increasingly blurred as indices and stocks generate fake breakouts. Budget policy whispers create sector-specific optimism, triggering strong sector rotation where money flows rapidly from one sector to another. This creates sharp rallies in individual stocks but with weak follow-throughs, keeping markets predominantly range-bound.

Option Price Dynamics

The most significant change during budget season involves option pricing. Agarwal provides specific examples of this price escalation:

This expensive nature stems from higher expected volatility as market participants anticipate larger moves due to budget policy decisions. Retail traders buying both Calls and Puts create huge demand, making options costlier than normal periods.

Recommended Trading Strategies

Agarwal suggests capitalizing on erratic price movements through specific approaches. The primary recommendation involves long straddle strategies - buying ATM Call and Put options simultaneously. This approach benefits traders when options become expensive due to rising volatility or when markets make significant directional moves.

For directional traders, the expert emphasizes sticking to short-term trades and booking profits whenever they appear, rather than expecting large positional moves.

Risk Management Considerations

The strategy carries inherent risks, particularly around timing uncertainty. Traders cannot predict exactly when options will become expensive, requiring analysis of historical data to determine probable timing. The biggest risk involves daily option price decay (theta decay), where longer trade duration leads to premium erosion.

Key Risk Management Rules:

• Exit positions if volatility rise doesn't occur within 3 days
• Maintain suitable stop losses
• Avoid holding positions too long due to theta decay

Strategies to Avoid

Agarwal specifically warns against certain approaches during January:

• Pure short straddles and strangles: These carry unlimited risk potential, especially when options are already expensive
• Late option purchases: Buying ATM Call and Put options 1-2 days before budget announcement, when options have already peaked in price or sit near peak levels

These late straddle purchases typically produce negative outcomes as options have already incorporated expected volatility.

Smart Money Approach

The expert reveals that sophisticated traders don't attempt to forecast markets or predict policy decisions during budget periods. Instead, they focus on observing behavioral patterns, including how retail traders behave, how positioning builds throughout the month, and how volatility evolves. From these observations, they develop consistent, repeatable strategies that bet on behavior rather than outcomes, avoiding gambling on uncertain policy announcements.

The Union Budget for financial year 2025-26 will be presented on February 1, 2026, according to a proposal made by the Cabinet Committee on Parliamentary Affairs. The Economic Survey, serving as a precursor to the budget document, will be presented by Chief Economic Advisor V Anantha Nageswaran on January 29, 2026.

Parliament Session Schedule

President Droupadi Murmu has approved the summoning of both Houses of Parliament for the Budget Session 2026, as announced by Union Parliamentary Affairs Minister Kiren Rijiju. The session will be conducted in two distinct phases to accommodate the legislative calendar.

Budget Presentation Details

Budget 2026 will mark Finance Minister Nirmala Sitharaman's ninth consecutive budget presentation. The February 1 date represents a continuation of the post-2017 budget calendar, which the government has maintained consistently since 2017.

Notable Parliamentary Sitting

The budget presentation on February 1, 2026, will constitute a rare Sunday sitting of Parliament for the annual financial statement. While the Union Budget has been presented on February 1 every year since 2017 regardless of the day of the week, Parliament has convened on Sundays only in limited circumstances in the past.

Timeline of Key Events

The budget preparation and presentation process follows a structured timeline leading up to the main event:

• January 28, 2026: Parliament Budget Session commences
• January 29, 2026: Economic Survey presentation by Chief Economic Advisor
• February 1, 2026: Union Budget 2025-26 presentation
• February 13, 2026: First phase of Budget Session concludes

The Economic Survey traditionally provides economic analysis and policy recommendations that set the context for the subsequent budget announcements. This sequence allows parliamentarians and stakeholders to review economic assessments before engaging with the government's fiscal proposals for the upcoming financial year.