Short Put option strategy
Shorting 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.
Payoff at expiry
Nifty, lot size 65 · Nifty future 25,151 · 17 Nov 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| SELL | OTM Put | 25,100 | 1 | 65 | ₹89.13 |
How it works
- Sell 1 OTM put at the 25,100 strike for ₹89.13, collecting the premium.
- You receive a net ₹5,793 upfront for the position. This is the most you can make.
Below 25,011 you lose, and the loss grows as Nifty falls.
Above 25,011 you profit, up to ₹5,793.
Set-up: Sell 1 lot OTM Put.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 23,650 | −6% | −₹88,457 |
| 24,400 | −3% | −₹39,707 |
| 24,900 | −1% | −₹7,207 |
| 25,150 | Unchanged | +₹5,793 |
| 25,400 | +1% | +₹5,793 |
| 25,900 | +3% | +₹5,793 |
| 26,650 | +6% | +₹5,793 |
How the Greeks affect it
When to use
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.
- 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.
Things to watch
- Uncapped risk.
- If the stocks falls below short Put strike , unlimited risk can arise.
Short Put: questions
What is a Short Put strategy?
Shorting 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.
When should you use a Short Put?
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.
How do you set up a Short Put?
Sell 1 lot OTM Put.
What is the maximum profit of a Short Put?
Profit limited to the Put premium.
What is the maximum loss of a Short Put?
Selling options exposes you to uncapped risk, potential loss could be heavy incase the directional momentum is reversed.
What is the breakeven of a Short Put?
With Nifty at 25,151, the example on this page breaks even at 25,011 at expiry.