Christmas Tree Put

A Christmas tree put is the bearish counterpart to the Christmas tree call, involving buying one at-the-money put and selling three out-of-the-money puts at lower strikes to generate substantial income while expressing moderate bearish market outlook. This sophisticated four-leg strategy is designed for professional traders who expect moderate downward price movement but want to maximize premium collection through multiple short put positions. The strategy works best when implied volatility is elevated and expected to decline, allowing traders to collect substantial premium from the three short puts while maintaining limited upside participation through the long put. Risk management is crucial as the strategy has unlimited loss potential below the lowest short strike, requiring careful position sizing and active monitoring. Professional traders use this strategy when they have strong conviction about support levels and want to generate income from elevated put premiums. The strategy benefits from time decay and volatility compression

If NIFTY is at ₹25,800, set up: Buy ₹25,800 Put for ₹110, Sell three ₹25,400 Puts for ₹50 each, creating ₹40 net credit with maximum profit of ₹440 if NIFTY closes at ₹25,400, but unlimited risk below ₹24,960.