Short Straddle option strategy
Short Straddle is a range bound strategy that aims to make money from sideways market and falling volatility.
Payoff at expiry
Nifty, lot size 65 · Nifty future 23,104 · 19 Oct 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| SELL | ATM Call | 23,100 | 1 | 65 | ₹89.80 |
| SELL | ATM Put | 23,100 | 1 | 65 | ₹86.30 |
How it works
- Sell 1 ATM call at the 23,100 strike for ₹89.80, collecting the premium.
- Sell 1 ATM put at the 23,100 strike for ₹86.30, collecting the premium.
- You receive a net ₹11,447 upfront for the position. This is the most you can make.
Below 22,924 you lose, and the loss grows as Nifty falls.
Between 22,924 and 23,276 you profit, up to ₹11,447.
Above 23,276 you lose, and the loss keeps growing as Nifty rises.
Set-up: Sell 1 lot ATM Call and Sell 1 lot ATM Put with same expiration.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 21,700 | −6% | −₹79,554 |
| 22,400 | −3% | −₹34,054 |
| 22,850 | −1% | −₹4,804 |
| 23,100 | Unchanged | +₹11,447 |
| 23,350 | +1% | −₹4,804 |
| 23,800 | +3% | −₹34,054 |
| 24,500 | +6% | −₹79,554 |
How the Greeks affect it
When to use
Short Straddle is a range bound strategy. It�s idle to execute Short Straddle for near month expiry in order to benefit from faster time decay.
- Ideally profitability is higher from range bound stock. Comparatively high yielding income strategy.
Things to watch
- Uncapped Risk on either side.
- Hedging cost would be high if stock gives any directional movement.
Short Straddle: questions
What is a Short Straddle strategy?
Short Straddle is a range bound strategy that aims to make money from sideways market and falling volatility.
When should you use a Short Straddle?
Short Straddle is a range bound strategy. It�s idle to execute Short Straddle for near month expiry in order to benefit from faster time decay.
How do you set up a Short Straddle?
Sell 1 lot ATM Call and Sell 1 lot ATM Put with same expiration.
What is the maximum profit of a Short Straddle?
Maximum Profit is limited to total premium received. Its maximum at the strike where Short Straddle is created.
What is the maximum loss of a Short Straddle?
Short straddle is open to unlimited risk if the stock moves above higher BEP( Strike +total premium) or below lower BEP ( Strike - total premium).
What is the breakeven of a Short Straddle?
With Nifty at 23,104, the example on this page breaks even at 22,924 and 23,276 at expiry.
Watch: Short Straddle videos
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