Bearish Seagull option strategy
Bearish Seagull is a bear put spread paid for by selling an OTM Call. It gives downside profit to the short put at little or no cost, in exchange for upside risk above the call strike.
Payoff at expiry
Nifty, lot size 65 · Nifty future 22,650 · 6 Oct 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| BUY | ATM Put | 22,650 | 1 | 65 | ₹135.67 |
| SELL | OTM Put | 22,550 | 1 | 65 | ₹91.19 |
| SELL | OTM Call | 22,750 | 1 | 65 | ₹91.61 |
How it works
- Buy 1 ATM put at the 22,650 strike for ₹135.67, paying the premium.
- Sell 1 OTM put at the 22,550 strike for ₹91.19, collecting the premium.
- Sell 1 OTM call at the 22,750 strike for ₹91.61, collecting the premium.
- You receive a net ₹3,063 upfront for the position. Your maximum profit is ₹9,563.
Below 22,797 you profit, up to ₹9,563.
Above 22,797 you lose, and the loss keeps growing as Nifty rises.
Set-up: Buy 1 lot ATM Put, Sell 1 lot OTM Put and Sell 1 lot OTM Call with same expiration date.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 21,300 | −6% | +₹9,563 |
| 21,950 | −3% | +₹9,563 |
| 22,400 | −1% | +₹9,563 |
| 22,650 | Unchanged | +₹3,063 |
| 22,900 | +1% | −₹6,687 |
| 23,350 | +3% | −₹35,937 |
| 24,000 | +6% | −₹78,187 |
How the Greeks affect it
When to use
When you are bearish, expect a fall to a target, and are comfortable owning the upside above the call strike.
- Low or zero cost to enter.
- Wide zone between the puts and the call with little loss.
- Useful as a cheap hedge for a defined fall.
Things to watch
- Uncapped upside risk above the call strike.
- Downside profit is capped at the short put.
- Requires margin for the short call.
Bearish Seagull: questions
What is a Bearish Seagull strategy?
Bearish Seagull is a bear put spread paid for by selling an OTM Call. It gives downside profit to the short put at little or no cost, in exchange for upside risk above the call strike.
When should you use a Bearish Seagull?
When you are bearish, expect a fall to a target, and are comfortable owning the upside above the call strike.
How do you set up a Bearish Seagull?
Buy 1 lot ATM Put, Sell 1 lot OTM Put and Sell 1 lot OTM Call with same expiration date.
What is the maximum profit of a Bearish Seagull?
Limited to the put spread width plus or minus the net premium, if the underlying closes at or below the short put.
What is the maximum loss of a Bearish Seagull?
Unlimited above the call strike, as the short call loses with every rise in the underlying.
What is the breakeven of a Bearish Seagull?
With Nifty at 22,650, the example on this page breaks even at 22,797 at expiry.