Options Trading Strategies

Complete guide to options strategies for Nifty, BankNifty, and Sensex. Each strategy includes setup instructions, payoff diagrams, Greeks impact, real examples with Indian market data, and adjustment techniques.

Neutral Strategies

Profit when the market stays range-bound. Ideal for premium sellers and theta traders.

NEUTRALIntermediate

Short Straddle

Sell ATM Call + ATM Put to collect maximum premium in low-volatility markets.

S 1× CALL ATM S 1× PUT ATM
Max Profit: Limited to the total premium received →
NEUTRALIntermediate

Iron Condor

A 4-leg defined-risk strategy that profits from range-bound markets and IV contraction.

B 1× PUT OTM (far) S 1× PUT OTM (near) S 1× CALL OTM (near) B 1× CALL OTM (far)
Max Profit: Limited to the net premium received from all four legs→
NEUTRALIntermediate

Iron Butterfly

A short straddle with protective wings — defined risk, maximum premium at ATM.

B 1× PUT OTM S 1× PUT ATM S 1× CALL ATM B 1× CALL OTM
Max Profit: Net premium received →
NEUTRALIntermediate

Short Strangle

Sell OTM Call + OTM Put for a wider profit zone than a straddle.

S 1× PUT OTM S 1× CALL OTM
Max Profit: Limited to the total premium received→
NEUTRALAdvanced

Butterfly Spread

A low-cost, defined-risk strategy that profits from minimal price movement around a target strike.

B 1× CALL Lower (ITM) S 2× CALL Middle (ATM) B 1× CALL Upper (OTM)
Max Profit: Width of one wing minus net debit paid →
NEUTRALAdvanced

Ratio Spread

Sell more options than you buy at different strikes — directional with premium collection.

B 1× CALL ATM S 2× CALL OTM
Max Profit: At the short strike: →
NEUTRALAdvanced

Calendar Spread

Profit from time decay difference between near-term and far-term options at the same strike.

S 1× CALL ATM (near-term expiry) B 1× CALL ATM (far-term expiry)
Max Profit: Occurs when the underlying is at the strike price at the near-term expiry →
NEUTRALAdvanced

Cross Butterfly

A 6-leg strategy combining one OTM put butterfly and one OTM call butterfly for a wider, dual-peak profit zone.

B 1× PUT OTM far (lower wing) S 2× PUT OTM (put body) B 1× PUT OTM near (upper wing) B 1× CALL OTM near (lower wing) S 2× CALL OTM (call body) B 1× CALL OTM far (upper wing)
Max Profit: Width of one butterfly wing minus total net debit — maximum profit occurs if expiry lands exactly at either butterfly's center strike→
NEUTRALIntermediate

Collar

Protect a holding for little or no cost by pairing a long put with a short call.

B 1× CALL Underlying (long stock/future) B 1× PUT OTM (protection) S 1× CALL OTM (financing)
Max Profit: →
NEUTRALAdvanced

Guts

An ITM strangle — buy (or sell) an ITM call and an ITM put for a volatility view.

S 1× CALL ITM S 1× PUT ITM
Max Profit: Short guts: Total premium received minus the difference between the strikes →
NEUTRALAdvanced

Broken Wing Butterfly

A skewed butterfly with unequal wings — often a credit with zero risk on one side.

B 1× CALL ATM / near (narrow wing) S 2× CALL Body B 1× CALL OTM far (wide wing)
Max Profit: Width of the narrow wing plus net credit →
NEUTRALAdvanced

Diagonal Spread

Different strikes AND different expiries — a directional, theta-positive hybrid.

S 1× CALL OTM (near-term expiry) B 1× CALL ITM/ATM (far-term expiry)
Max Profit: Variable — maximized if the underlying is near the short strike at the near-term expiry, with the long leg retaining value→

Bullish Strategies

Profit when the market moves upward. Directional strategies for bullish views.

BULLISHBeginner

Bull Call Spread

A defined-risk bullish strategy using a call debit spread.

B 1× CALL ATM or slightly ITM S 1× CALL OTM
Max Profit: Width of strikes minus net debit paid→
BULLISHAdvanced

Jade Lizard

Short put + short call spread = premium collection with zero risk on the upside.

S 1× PUT OTM S 1× CALL OTM (near) B 1× CALL OTM (far)
Max Profit: Total premium collected →
BULLISHBeginner

Long Call

Buy a call option to profit from a rising market with limited risk and unlimited upside.

B 1× CALL ATM or OTM
Max Profit: Unlimited — increases as the underlying rises above the strike→
BULLISHIntermediate

Short Put

Sell a put to collect premium when you expect the market to stay flat or rise.

S 1× PUT OTM
Max Profit: Limited to the premium received→
BULLISHBeginner

Covered Call

Earn income by selling a call against an underlying you already own.

B 1× CALL Underlying (long stock/future) S 1× CALL OTM
Max Profit: →
BULLISHBeginner

Protective Put

Insure a long position by buying a put — capped downside, unlimited upside.

B 1× CALL Underlying (long stock/future) B 1× PUT OTM or ATM
Max Profit: Unlimited — full upside of the underlying, reduced by the put premium paid→
BULLISHIntermediate

Bull Put Spread

A defined-risk bullish credit strategy — sell a put spread to collect premium.

S 1× PUT OTM (higher) B 1× PUT OTM (lower)
Max Profit: Limited to the net credit received→

Bearish Strategies

Profit when the market declines. Directional strategies for bearish views.

BEARISHBeginner

Bear Put Spread

A defined-risk bearish strategy using a put debit spread.

B 1× PUT ATM or slightly ITM S 1× PUT OTM
Max Profit: Width of strikes minus net debit paid→
BEARISHBeginner

Long Put

Buy a put option to profit from a falling market or to hedge, with limited risk.

B 1× PUT ATM or OTM
Max Profit: Large but capped — increases as the underlying falls →
BEARISHIntermediate

Short Call

Sell a call to collect premium when you expect the market to stay flat or fall.

S 1× CALL OTM
Max Profit: Limited to the premium received→
BEARISHIntermediate

Bear Call Spread

A defined-risk bearish credit strategy — sell a call spread to collect premium.

S 1× CALL OTM (lower) B 1× CALL OTM (higher)
Max Profit: Limited to the net credit received→

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