Algo Strategy : Bear Put Spread is executed when a trader thinks the price underline asset will decrease moderately in a range .The trader forgoes a bigger profit by reducing the cost by selling OTM PUT and receiving premium .
Strategy :
Buy ITM PUT
Sell OTM PUT
NIFTY 50 Underline : 17585
BUY ITM PUT Strike 17700 : Premium Paid Rs. 154
SELL OTM PUT Strike 17500 : Premium Received Rs. 60
When NIFTY 50 Falls to 17400
BUY PUT = 17700-17400-154 = Rs.146
SELL PUT = 17400-17500+60 = Rs.-40
Net Profit = Rs.106 Maximum Profit
Formula : 17700-17500-154+60 = Rs. 106
When NIFTY 50 Rises to 17800
– BUY ITM PUT Premium Paid + SELL PUT Premium Received = -154 +60 = -94 Loss Maximum Loss
Formula for Maximum Profit : Strike Price of BUY PUT – Strike Price of SELL PUT -Net Premium-Brokerage
Maximum Profit : When Price of Underline <= Strike Price of Sell Call
Maximum Loss : Premium Paid + Brokerage
ALGO Strategy BULL CALL Spread : Algo Strategy : Bull Call Spread
NSE India Options Chain Website https://www.nseindia.com/option-chain