Option Strategy with live account – Bear put spread.

Option Strategy with live account – Bear put spread.

Bear Put Spread: An Options Strategy for a Bearish Market

The Bear Put Spread is an options trading strategy used when a trader expects a moderate decline in the price of an underlying asset. This strategy involves buying a put option at a higher strike price and selling another put option at a lower strike price with the same expiration date.

 How Bear Put Spread Works

1. Buy a Put Option (Higher Strike Price, Higher Premium)
2. Sell a Put Option (Lower Strike Price, Lower Premium)
3. Net Debit Strategy – Since you are paying more for the higher strike put than receiving for the lower strike put, this strategy requires an initial net debit (cost).

 Profit & Loss Calculation

• Maximum Profit = (Higher Strike – Lower Strike) – Net Debit Paid
• Maximum Loss = Net Debit Paid
• Breakeven Price = Higher Strike Price – Net Debit Paid

 Example of a Bear Put Spread (Live Market Scenario)

Scenario:

Stock: Nifty 50 (Trading at ₹22,000)
Strategy: Bear Put Spread
Expiration: Next Monthly Expiry

Steps to Execute:

1. Buy a 22,100 Put Option at ₹150
2. Sell a 21,900 Put Option at ₹80
3. Net Cost (Debit) = ₹150 – ₹80 = ₹70

Profit & Loss Outcomes:

 Key Advantages

Limited Risk – You know your maximum loss in advance.
Reduced Cost – Cheaper than buying a single put.
Good for Moderate Bearish Trends – You profit from moderate price declines.

 Disadvantages

Capped Profit Potential – Unlike a single put, your profit is limited.
Time Decay Effect – If the stock doesn’t move quickly, the trade can lose value over time.

 Live Trading & Monitoring with a Real Account

• Platforms: You can execute this trade on ICICIDirect, Zerodha, Upstox, AngelOne, or Groww.
• Real-Time Monitoring: Use Open Interest (OI) data, Delta, and Implied Volatility (IV) analysis to track performance.
• Exit Strategy: Consider closing the spread early if the stock nears the lower strike price.

 Final Thoughts

The Bear Put Spread is a powerful options strategy for traders expecting a moderate market decline with limited risk and controlled profit potential. Would you like assistance in placing this trade on a specific platform?

Option Strategy with live account – Bear put spread.

Trading Downtrends Effectively with Bear Put Spreads

Option Strategy SBIN BEAR PUT RATIO SPREAD

Bear Put Spread

A Bear Put Spread is a popular options trading strategy used when you expect a moderate decline in the price of an asset. It’s a defined-risk, defined-reward strategy suitable for live trading accounts.

What is a Bear Put Spread?

A bear put spread involves:

1. Buying a put option (higher strike) – This is the main bearish position.

2. Selling a put option (lower strike) – This reduces the cost of the position and limits potential profit.

You pay a net debit (net premium) to enter the trade.

When to Use It:

• You have a bearish outlook on the underlying.

• You expect moderate downward movement, not a crash.

• You want to limit your losses while reducing upfront cost.

Example (Live Market Style)

Assume:

• Stock: Nifty 50 Index

• Current Price: ₹22,000

• Outlook: You expect it to fall moderately in the next 2 weeks.

• Expiry: Next monthly expiry

You might:

Net Debit (Cost) = ₹220 – ₹140 = ₹80 per lot
Max Profit = (₹22,000 – ₹21,800) – ₹80 = ₹120
Max Loss = ₹80 (the net premium paid)

Note: 1 Nifty option lot = 50 units
Max Loss in ₹ = 50 × 80 = ₹4,000
Max Profit in ₹ = 50 × 120 = ₹6,000

Payoff Chart

Advantages

• Lower cost than buying a put outright.

• Defined risk and reward.

• Ideal for moderately bearish views.

Disadvantages

• Limited profit potential.

• If the underlying stays above breakeven, you lose the premium.

Risk Management (Live Account Tips)

• Position sizing: Don’t risk more than 1–2% of your capital.

• Use stop-losses or alerts on the underlying price.

• Monitor theta decay (time decay) — avoid holding too close to expiry if the move hasn’t happened.

How to Execute in a Live Trading Account (Zerodha, Upstox, AngelOne etc.)

1. Go to options trading tab.

2. Choose the same expiry for both puts.

3. Place:

   • Buy order for higher strike put

   • Sell order for lower strike put

4. Confirm net debit.

5. Monitor daily using P&L charts.

Would you like a live mock setup with current market prices (e.g., from NSE or Zerodha) or a downloadable Excel calculator for bear put spreads?

option-strategies-quick-guide.pdf

Using a Bear Put Spread

Module 6_Option Strategies.pdf