Put Backspread

Options Spreads Advanced NIFTY BANKNIFTY FINNIFTY Stock Options

Strongly Bearish - expecting large downward move or crash

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Quick Reference

Strategy Type	Volatility Long - Bearish Backspread / Crash Hedge
Market Outlook	Strongly Bearish - expecting large downward move or crash
Risk Profile	Defined Maximum Loss at Long Strike
Reward Profile	Substantial below Lower Breakeven, Credit above Short Strike
Time Horizon	7-30 days, or rolling monthly for perpetual crash protection
Capital Requirement	Net Credit or small debit, margin for short put approximately Rs.40,000-60,000
Best Used When	Low IV environment with rising crash risk, geopolitical tensions, or breakdown setups

When to Use This Strategy

Low IV environment with rising crash risk, geopolitical tensions, or breakdown setups

Payoff Diagram

P/L │ │ UNLIMITED │ PROFIT │ ╲ │ ╲ │ ╲ │ ╲ │ ● │ ╱ Lower BE ─┼──────────╱─────────────●────────────●── Stock Price │ ╱ │ │ │ ╱ Long Strikes Short Strike │ ╱ (×2) │ ● │ Max Loss Zone (between strikes) │

India-Specific Notes

Trading Hours

Equity	9:15 AM - 3:30 PM IST
Derivatives	9:15 AM - 3:30 PM IST
Pre Open	9:00 AM - 9:15 AM IST

Expiry Behavior

Weekly Expiry	Every Thursday (NIFTY, BANKNIFTY, FINNIFTY)
Monthly Expiry	Last Thursday of month (Stock options)
Settlement	Cash settled for index options
Backspread Note	Put backspreads benefit from steep put skew - OTM puts are relatively expensive in India

Lot Sizes

Stocks

Varies by stock (check NSE)

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