Options Strategies

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Bull Put Spread (Bullish)

• Sell ATM/ITM Put, Buy OTM Put.
• Max Profit = Net Premium Received.
• Max Loss = Spread Width - Premium.
• Best when: Expecting price to stay above sold strike.

Bear Call Spread (Bearish)

• Sell ATM/ITM Call, Buy OTM Call.
• Max Profit = Net Premium Received.
• Max Loss = Spread Width - Premium.
• Best when: Expecting price to stay below sold strike.

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Setup

• Sell 1 ATM Call + Sell 1 ATM Put (same strike, same expiry).
• Max Profit = Total Premium Received (if price expires at strike).
• Max Loss = Unlimited (if price moves sharply).
• Breakeven = Strike ± Total Premium.

Indian Market Tips

Best deployed when VIX is high (above 15) and expected to drop. Avoid on expiry day due to gamma risk. BANKNIFTY straddles are popular due to high premiums. Always have a stop loss plan.

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Setup

• Sell 1 OTM Call + Sell 1 OTM Put (different strikes, same expiry).
• Max Profit = Total Premium Received (if price stays between strikes).
• Max Loss = Unlimited (if price moves sharply beyond breakevens).
• Breakeven = Put Strike - Premium, Call Strike + Premium.

Strike Selection

Common approach: Sell strikes 1-2% OTM from current price. For NIFTY at 22000, sell 21700 PE and 22300 CE. Adjust based on VIX and expected move.

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Iron Fly (Straddle + Wings)

• Sell ATM Call + Sell ATM Put.
• Buy OTM Call + Buy OTM Put (protection).
• Max Profit = Net Premium - Cost of Wings.
• Max Loss = Wing Width - Net Premium.

Iron Condor (Strangle + Wings)

• Sell OTM Call + Sell OTM Put.
• Buy further OTM Call + Buy further OTM Put.
• Wider profit zone, smaller max profit.
• Popular for weekly expiries on NIFTY/BANKNIFTY.