Options Strategy
High risk
Short Straddle - Nifty 50
Sell an ATM call and an ATM put at the same strike and expiry. You collect premium upfront and profit when Nifty stays flat. Losses are unlimited if Nifty makes a large move in either direction.
Important: This is a high-risk strategy suitable only for experienced traders. Selling options requires sufficient margin in your account and carries the risk of losses far exceeding the premium collected. Always use stop-losses and monitor positions actively.
Leg 1 — SELL Call
24,000 CE
Receive premium: ₹350
Leg 2 — SELL Put
24,000 PE
Receive premium: ₹340
Max profit
₹51,750
Total premium received
Upper breakeven
24,690
Strike + total premium
Lower breakeven
23,310
Strike − total premium
Max loss
Unlimited
Either direction
Adjust your trade parameters
Big rally (above upper BE)
Short call bleeds unlimited losses. Every point above upper BE = ₹75 loss per lot.
Flat market (between BEs)
Both options decay to zero. You keep all or part of the premium collected.
Big fall (below lower BE)
Short put bleeds unlimited losses. Every point below lower BE = ₹75 loss per lot.
Short Straddle vs Long Straddle: The short straddle is the exact mirror of the long straddle. Where the long straddle profits from big moves, the short straddle profits from no move. The premium collected is capped; the loss is not. Always have a stop-loss plan before entering.
How to execute on NSE
1
Confirm your broker has sufficient margin available. Selling two ATM options requires significant SPAN margin, typically 1.5–2x the lot value.
2
Select the ATM strike closest to current Nifty spot. Choose an expiry where you expect low volatility mid-week of a non-event week works best.
3
SELL the Call and SELL the Put simultaneously at the same strike. Net credit = Call premium + Put premium × 75.
4
Set a stop-loss at 1.5–2x the premium collected. If the position moves against you, exit immediately. Do not average down.
5
Exit both legs together once 50–70% of the premium has decayed. Do not hold to expiry.the risk of a sudden spike near expiry is high.
Key risks to know
Unlimited loss on both sides: A sharp Nifty move in either direction can wipe out far more than the premium collected. There is no natural cap on losses without active management.
Event risk: Surprise RBI announcements, geopolitical events, or global market crashes can trigger gaps that bypass stop-losses entirely. Avoid holding this position over major scheduled events.
Margin calls: As the position moves against you, brokers will demand additional margin. If you cannot meet the call, the broker will square off your position at a loss.
Theta works for you — but slowly: Time decay benefits the seller, but only if the market stays flat. A single day of high volatility can erase several days of theta gains.