Short Put
You sell (short) a Put
Positions in Chart: Sell 1 lot of 25400 PE. Spot price: 25800
Setup
Sell OTM Put option
When to Use
- Generate income from sideways or rising markets
Market Outlook
Volatility Expectation↘Expected to Fall Sharply
Price Direction↗→Expected to Rise or Stay Flat
Risk & Reward
Breakeven PointStrike Price minus Premium (credit) received
Max Contract LossStrike Price minus Premium received
Max Position LossSame as Max Contract Loss
Strategy Details
Complexity LevelIntermediate
DirectionSteady Bullish
VolatilityFall
Number of Legs1 Leg
Strategy TypeCredit
Hedging CapabilityNo Hedging or Naked
Description
A trader who expects the underlying to remain above a certain level can sell a Put to generate income. The trader receives a credit (premium) for selling the Put
Example
If NIFTY is at ₹25,800 and you sell a ₹25,400 Put for ₹35, you profit if NIFTY stays above ₹25,365 (strike - premium) at expiration.
This information is for educational purposes only and should not be considered as financial advice. Always consult with a qualified financial advisor before making investment decisions. Data is constructed and is not actual. Calculations may have errors.
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