Short Put / Cash-Secured Put (CSP)
Sell a Put option to collect upfront premium income, willing to buy the underlying stock at a discount if assigned.
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 (1 Leg)
| Action | Instrument / Strike | Type | Expiry | Approx Delta | Est. Premium | Qty Ratio |
|---|---|---|---|---|---|---|
| SELL | 2,800 PE (OTM 30-Delta) | PUT | Monthly Expiry | -0.30 | ₹45 | 1x |
How the Structure Works
The strategy benefits from positive Theta decay (+θ) and falling Implied Volatility (-ν). You make money in 3 out of 4 scenarios: if the stock rises, stays flat, or falls slightly but remains above the strike price.
Selling a Cash-Secured Put (CSP) is one of Warren Buffett's favorite options strategies. By selling an OTM Put on a high-quality stock you want to own, you collect immediate cash premium. If the stock stays above your strike, you keep 100% of the premium as pure profit. If the stock falls below the strike, you are assigned shares at a steep discount to the original market price.
Institutional Strike Selection Rules
Phased Execution Blueprint
Follow this structured sequence to eliminate emotional hesitation during order entry, lifecycle management, and final exit.
Identify High-Quality Bluechip with High IV
Scan Nifty 50 stocks with high IV Percentile (>60) trading at strong 50/200 DMA support.
Sell 30-45 DTE 25-Delta Put
Sell 30-45 Days to Expiry Put to capture the steepest part of the theta decay curve.
The 50% Profit Rule
Close the trade when 50% to 75% of maximum profit is captured to eliminate tail risk.
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 Down and Out: If tested, roll the Put to next month at a lower strike price for a net credit.
- Accept Delivery & Sell Covered Calls: Take delivery of stock at the discounted breakeven and start selling Covered Calls (The Options Wheel Strategy).
Never sell naked puts on illiquid mid-caps without cash collateral.
RELIANCE 2800 PE (Monthly) Trade Walkthrough
Reliance traded at ₹2,920 at 50 DMA support with IV Rank of 65.
Sold 1 Lot (250 qty) 2,800 PE @ ₹45 (Credit collected = ₹11,250)
- Stock stayed above ₹2,800; collected ₹8,500 passive cash flow.
Common Mistakes to Avoid
Why it happens: High premium indicates high bankruptcy or crash risk.
Solution: Strictly sell CSPs on top-tier Nifty 50 bluechips.
Institutional Pro Tips
Short Put / Cash-Secured Put (CSP) FAQs
What happens if a stock option expires in-the-money in India?
In India, stock options are physically settled. If your Short Put expires ITM, you must take physical delivery of the shares by paying the full contract value (Strike x Lot Size) in cash.
Alternative & Complementary Strategies
Hold underlying stock shares and sell an OTM Call option against them to generate consistent recurring monthly cash income.
Sell a higher OTM Put and buy a lower protective Put to collect upfront credit with strictly defined maximum risk.
Sell an OTM Call Spread and an OTM Put Spread simultaneously to collect double premium in a range-bound market with strictly defined risk.