Bullish Risk Reversal option strategy
Bullish Risk Reversal buys an OTM Call and funds it by selling an OTM Put. It costs little or nothing to enter and gains when the underlying rallies past the call strike.
Payoff at expiry
Nifty, lot size 65 · Nifty future 23,104 · 19 Oct 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| BUY | OTM Call | 23,150 | 1 | 65 | ₹66.69 |
| SELL | OTM Put | 23,050 | 1 | 65 | ₹63.63 |
How it works
- Buy 1 OTM call at the 23,150 strike for ₹66.69, paying the premium.
- Sell 1 OTM put at the 23,050 strike for ₹63.63, collecting the premium.
- You pay a net ₹199 upfront for the position. Losses are not capped.
Below 23,153 you lose, and the loss grows as Nifty falls.
Above 23,153 you profit, and profit keeps growing as Nifty rises.
Set-up: Buy 1 lot OTM Call and Sell 1 lot OTM Put with same expiration date.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 21,700 | −6% | −₹87,949 |
| 22,400 | −3% | −₹42,449 |
| 22,850 | −1% | −₹13,199 |
| 23,100 | Unchanged | −₹199 |
| 23,350 | +1% | +₹12,801 |
| 23,800 | +3% | +₹42,051 |
| 24,500 | +6% | +₹87,551 |
How the Greeks affect it
When to use
When you are bullish, expect a move up, and are willing to take on downside risk below the put strike.
- Low or zero cost to enter.
- Flat zone between the strikes gives room for noise.
- Benefits from a rally and from put skew if puts are richer.
Things to watch
- Uncapped risk below the put strike.
- Requires margin for the short put.
- No gain unless the underlying crosses the call strike.
Bullish Risk Reversal: questions
What is a Bullish Risk Reversal strategy?
Bullish Risk Reversal buys an OTM Call and funds it by selling an OTM Put. It costs little or nothing to enter and gains when the underlying rallies past the call strike.
When should you use a Bullish Risk Reversal?
When you are bullish, expect a move up, and are willing to take on downside risk below the put strike.
How do you set up a Bullish Risk Reversal?
Buy 1 lot OTM Call and Sell 1 lot OTM Put with same expiration date.
What is the maximum profit of a Bullish Risk Reversal?
Unlimited above the call strike plus or minus the net premium.
What is the maximum loss of a Bullish Risk Reversal?
Substantial below the put strike, as the short put loses with every fall in the underlying.
What is the breakeven of a Bullish Risk Reversal?
With Nifty at 23,104, the example on this page breaks even at 23,153 at expiry.
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