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Short Put
bullishShorting a Put option is a simple but risky strategy & hence qualified as an advanced strategy. It is recommended when the price of the underlying asset is expected to rise & the stock is not expected to fall further
Example:
| Instrument | Qty | Price |
|---|---|---|
| SELL NIFTY 06-Oct-26 22750 PE | 65 | 67.2 |
When To Execute?
When you expect a rise in the underlying asset price with more degree of conviction Or when you are willing to buy an underlying if it comes to Short Put strike
Trade
Sell 1 lot OTM Put
Advantages
Profits from rising or range bound stocks
Its an Income strategy
Helps to generate income if the stock fails to move below put strike. Idle in a scenario when one is ready to buy the stock in correction if it falls to put strike
Disadvantages
Uncapped risk
If the stocks falls below short Put strike , unlimited risk can arise
Maximum Profit
Profit limited to the Put premium
Maximum Loss
Selling options exposes you to uncapped risk, potential loss could be heavy incase the directional momentum is reversed