Covered Put
Hold a short futures position and sell an OTM Put against it to generate recurring cash flow in a declining market.
Interactive Payoff Curve & Greeks Simulation
Visualize the theoretical profit & loss at expiry vs T+0 immediate day curves. Drag the simulation slider to stress-test your trade.
Option Payoff Curve & Greeks
Net Option Greeks (Sensitivity Profile)
Values per 1 Lot standard unitMulti-Leg Position Structure (2 Legs)
| Action | Instrument / Strike | Type | Expiry | Approx Delta | Est. Premium | Qty Ratio |
|---|---|---|---|---|---|---|
| SELL | Short 1 Lot Futures | STOCK | Monthly | -1.00 | ₹24500 | 1x |
| SELL | 24,000 PE (OTM) | PUT | Monthly Expiry | -0.30 | ₹120 | 1x |
How the Structure Works
Short Delta combined with positive Theta decay (+θ).
The Covered Put is the exact bearish mirror of a Covered Call. You hold a short futures position and sell an OTM Put against it to generate recurring cash income while maintaining downside target profit.
Institutional Strike Selection Rules
Phased Execution Blueprint
Follow this structured sequence to eliminate emotional hesitation during order entry, lifecycle management, and final exit.
Bearish Trend Cash Flow
Deploy when short futures in downtrend.
Interactive Margin & Position Size Calculator
Calculate exact lot sizing based on the 1-2% risk rule to preserve capital against Black Swan events.
Options Position Size & Max Risk Calculator
Total net liquid equity in your brokerage account
Recommended: 1.0% - 2.0% for disciplined longevity
Wing width max loss or defined mental/system SL
Rigorous Risk Rules & Adjustment Protocols
Non-negotiable parameters for stop-loss triggers, portfolio caps, and firefighting adjustments when market tests your strikes.
- Roll put down.
F&O margin required.
NIFTY Covered Put Trade Walkthrough
Short Nifty in confirmed downtrend.
Short Nifty Fut @ 24,500 / Sold 24000 PE @ ₹120 (Total Max Profit = 620 pts = ₹15,500)
- Captured 500 pt drop + ₹120 put premium.
Common Mistakes to Avoid
Why it happens: Rallies cause unlimited loss.
Solution: Keep stop loss on futures.
Institutional Pro Tips
Covered Put FAQs
Can I do a Covered Put in cash market?
No. In India, cash equity shorting cannot be held overnight. You must use Stock/Index Futures.
Alternative & Complementary Strategies
Hold underlying stock shares and sell an OTM Call option against them to generate consistent recurring monthly cash income.
Hold a short futures position and buy an OTM Call option as disaster insurance against sudden upward short squeezes.
Buy a higher ATM Put and sell a lower OTM Put to reduce trade cost, neutralize theta decay, and capture defined-risk downside profits.