Bear Put Spread

What you must believe

NIFTY falls toward a level you can name (here ~24,800) by expiry. Same defined-risk logic as the bull call spread, pointed down, with the ITM anchor doing the work.

Construction

Buy the 25,200 PE at ₹255 (200 points ITM), sell the 24,800 PE at ₹90. Net debit ₹165 per unit: ₹10,725 per lot.

The numbers, before entry

• Max loss: ₹10,725, above 25,200 at expiry
• Max profit: ₹15,275, the 400 width minus the debit, below 24,800
• Breakeven: 25,035, just below spot: the ITM long leg starts ahead
• Margin: the debit only

Greeks profile

Net short delta, mildly long gamma, theta near neutral at entry (the ITM leg carries little time value; the sold OTM leg pays rent), vega roughly flat.

Realistic expectations

Starting ITM buys a breakeven near spot: the market only has to not rally for this to pay something. The price of that comfort is the bigger debit at risk if the rally comes anyway. Slightly better than a coin flip for slightly less than 3:2 payout is the honest shape.

Management rules

• Take profits at the short strike; below 24,800 nothing more can be earned
• Exit on a close above the level that made you bearish
• Watch the sold leg's skew-rich premium: it refunds a good slice of the toll

With other strategies

• As portfolio protection, it is the protective put's budget cousin: capped insurance for a fraction of the full-floor cost (Lesson 8)
• A bear call credit spread above it doubles the bearish premium flow: one paid, one collected, same opinion expressed twice
• IV rank picks between it and the credit version: rich IV favours selling the call spread instead of buying this
• Inside a collar-and-wheel book, it hedges assigned stock through a specific feared window without surrendering the shares

Common mistakes

• Buying the OTM-only version for cheapness and needing a crash to break even
• Holding the full debit through a squeeze because "it has to come back down"
• Forgetting that the ITM leg's size makes this a bigger ticket than it feels