What Is a Nifty Short Strangle Strategy and How Does It Work?
About Short Strangle: A short strangle is an options strategy where a trader sells both a call and a put option of the same expiry but at different strike prices. The goal is to benefit from time decay and reduced volatility, as the strategy profits when the underlying index or stock trades within a defined range. While the premium received offers limited gains, the risk can be unlimited if there are sharp price swings.
Nifty Short Strangle Example
Positions Initiated:
✔ SELL NSE CALL NIFTY 16SEP2025 25450 @ 13.25
✔ SELL NSE PUT NIFTY 16SEP2025 24500 @ 13.45
Inflow: 26.70
Stop-Loss: 52
Target: 1
✔ SELL NSE CALL NIFTY 16SEP2025 25450 @ 13.25
✔ SELL NSE PUT NIFTY 16SEP2025 24500 @ 13.45
Inflow: 26.70
Stop-Loss: 52
Target: 1
Risk and Reward
✔ Reward is capped to the premium collected (₹26.70 in this case).
✔ Risk is unlimited if Nifty moves sharply beyond either strike.
✔ Stop-loss is defined at 52 to control losses.
✔ This strategy works best in range-bound markets with low volatility.
✔ Risk is unlimited if Nifty moves sharply beyond either strike.
✔ Stop-loss is defined at 52 to control losses.
✔ This strategy works best in range-bound markets with low volatility.
Investor Takeaway
The short strangle strategy is effective for traders expecting limited movement in Nifty before expiry. It allows steady income from premium collection, but strict stop-loss discipline is essential to avoid large losses.
For traders looking to navigate market swings, here are useful references:
👉 Nifty Tip | BankNifty Tip
📌 Access more detailed market strategies at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
For traders looking to navigate market swings, here are useful references:
👉 Nifty Tip | BankNifty Tip
📌 Access more detailed market strategies at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
