Put Christmas Tree option strategy
Put Christmas Tree buys one ATM Put, skips a strike, sells three OTM Puts and buys two further OTM Puts. It is a cheap, butterfly-like bet that the underlying falls to the sold strike.
Payoff at expiry
Nifty, lot size 65 · Nifty future 23,104 · 19 Oct 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| BUY | ATM Put | 23,100 | 1 | 65 | ₹85.63 |
| SELL | OTM Put | 23,000 | 3 | 195 | ₹45.03 |
| BUY | OTM Put | 22,950 | 2 | 130 | ₹31.02 |
How it works
- Buy 1 ATM put at the 23,100 strike for ₹85.63, paying the premium.
- Sell 3 OTM puts at the 23,000 strike for ₹45.03 each, collecting the premium.
- Buy 2 OTM puts at the 22,950 strike for ₹31.02 each, paying the premium.
- You pay a net ₹818 upfront for the position. This is the most you can lose.
Below 22,952 you lose, up to ₹818.
Between 22,952 and 23,089 you profit, up to ₹4,962.
Above 23,089 you lose, up to ₹818.
Set-up: Buy 1 lot ATM Put, Sell 3 lots OTM Puts two strikes lower and Buy 2 lots OTM Puts one strike below those.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 21,700 | −6% | −₹818 |
| 22,400 | −3% | −₹818 |
| 22,850 | −1% | −₹818 |
| 23,100 | Unchanged | −₹818 |
| 23,350 | +1% | −₹818 |
| 23,800 | +3% | −₹818 |
| 24,500 | +6% | −₹818 |
How the Greeks affect it
When to use
When you are moderately bearish with a specific target and want a lower cost than a regular butterfly.
- Lower cost than a butterfly for a similar target.
- Risk is defined upfront.
- Skipped strike gives room for the move to develop.
Things to watch
- Profit zone is narrow.
- Six contracts across three strikes.
- Needs the underlying to reach the target by expiry.
Put Christmas Tree: questions
What is a Put Christmas Tree strategy?
Put Christmas Tree buys one ATM Put, skips a strike, sells three OTM Puts and buys two further OTM Puts. It is a cheap, butterfly-like bet that the underlying falls to the sold strike.
When should you use a Put Christmas Tree?
When you are moderately bearish with a specific target and want a lower cost than a regular butterfly.
How do you set up a Put Christmas Tree?
Buy 1 lot ATM Put, Sell 3 lots OTM Puts two strikes lower and Buy 2 lots OTM Puts one strike below those.
What is the maximum profit of a Put Christmas Tree?
Limited, earned if the underlying closes at the sold strike at expiry.
What is the maximum loss of a Put Christmas Tree?
Limited to the net debit paid, if the underlying stays above the highest strike or falls well below the lowest strike.
What is the breakeven of a Put Christmas Tree?
With Nifty at 23,104, the example on this page breaks even at 22,952 and 23,089 at expiry.