Supertrend option selling
A trend-following way to sell options. A Supertrend line on 5-minute NIFTY futures bars sets both the direction and the strike: in an uptrend the strategy sells the put nearest the Supertrend value, in a downtrend the call. The idea is that the Supertrend acts as support or resistance, so the sold option should expire away from the money. A touch of the line ends the trade.How it trades
Results
PRE-BUILT · DEFAULTSWhere it made and lost money
In this test, trend days that closed near the high or low made ₹47,990 over 164 trades, more than the full year's profit: once the Supertrend side was right, the price moved away from the sold strike and the option decayed until 15:15. Choppy wide-range days lost ₹8,086 over 167 trades, as the price swung back to touch the line and forced a stop and a re-run. Weekly expiry days lost ₹12,750 over 125 trades with a 33% win rate, because a strike near the Supertrend line is close to the money and expiry-day gamma makes small moves costly; other days made ₹59,345 over 456.
About this strategy
- Compute a Supertrend (period 10, multiplier 3) on 5-minute bars of the near-month NIFTY future.
- At the first bar close from 09:20, if the Supertrend is below price, sell the put at the strike nearest the Supertrend value; if above, sell the call, on the nearest weekly expiry.
- Buy a hedge of the same type 900 points further out, and skip any run whose sold option trades below 10 points.
- Exit when the futures price touches the Supertrend line, or when the sold option rises 50% above its entry price.
- After a stop, start a new run at the next bar close using the Supertrend direction at that time, up to three runs a day.
- No new run in the last 40 minutes of the session; close everything at 15:15.
- Adding lots after losses (martingale) is available but off by default.
Why traders use it
Supertrend is one of the most popular trend indicators among Indian intraday traders, and selling options in its direction combines a trend view with time decay. Instead of buying an option that needs a fast move, the trader sells one on the side the trend is moving away from, earning premium even if the market only drifts. Placing the strike at the Supertrend value ties the risk to a level the trader is already watching.
The year in plain words
With default settings on NIFTY from 1 Oct 2025 to 30 Sep 2026, the strategy made 586 runs, about 49 a month, and won 41%, finishing ₹45,838 ahead before costs with a profit factor of 1.15. Wins averaged ₹1,466 against ₹899 for losses. Most runs, 425, ended on a Supertrend touch, 52 on the premium stop and 109 at 15:15. April made ₹18,468 and June lost ₹11,246. Each run uses two legs, so costs added up: after ₹20 per order and bid-ask slippage the result was a ₹9,341 loss.
What the settings do
Risks
- Frequent stops and re-runs mean many orders, and costs turned a gross profit into a net loss.
- The sold strike sits near the Supertrend line, so it can be close to the money and react sharply to small moves.
- Turning on martingale sizing adds lots during losing streaks, which can multiply losses.
- Without the hedge the short option has open-ended risk on a sudden move.
Who it suits
Intraday option sellers who already follow Supertrend and want to sell premium in its direction with a hedge, and who can automate several runs a day. It suits those with low per-order costs and hedged option-selling margin.
Questions traders ask
What is Supertrend option selling?
It sells an option on the side the Supertrend says the market is moving away from: a put in an uptrend, a call in a downtrend. Here the strike is placed at the Supertrend line itself, and the trade ends if the price touches that line.
Is Supertrend option selling profitable on NIFTY?
In this backtest from 1 Oct 2025 to 30 Sep 2026 it made ₹45,838 before costs but lost ₹9,341 after ₹20 per order and bid-ask slippage, with statutory charges extra. Expiry days were the weakest. Past results do not guarantee future ones.
What Supertrend settings does it use?
Period 10 and multiplier 3 on 5-minute bars of the NIFTY near-month future. Both can be changed; a larger multiplier moves the line, and so the sold strike, further from the price.
Why is martingale sizing off by default?
A martingale adds lots after each loss, hoping the next run wins it back. It can recover small losses but grows the position exactly when the market is going against the strategy. It is available as a setting, capped by “Max lots”, but not used in the default run.