How to choose a strategy
A strategy is a view turned into a payoff. Before picking one, write down your view in four parts: direction (up, down, sideways, don't know), magnitude (big, small), timing (this week, this month), and volatility (is IV high or low right now, Chapter 8). Every structure below is the natural fit for some combination. Each one is priced live on today's NIFTY chain; the numbers are per lot.
1. Bull call spread — moderately bullish, defined risk
Buy a call, sell a higher call. The short call pays for part of the long one, capping your gain at the width of the spread but cutting the cost and the theta bleed. Use when you expect a moderate rise and IV is not cheap. Max loss = debit paid; max profit = width − debit.
2. Bear put spread — moderately bearish, defined risk
The mirror: buy a put, sell a lower put. Expresses a measured fall without paying full price for downside protection (which, given skew, is usually expensive).
3. Long straddle — big move, either way
Buy the ATM call and put. You profit if NIFTY closes beyond either breakeven — spot ± straddle cost — by expiry. It is the purest bet that the market is underpricing movement. It loses to theta every quiet day, and to vol crush after events. Use when IV percentile is low and you expect a catalyst the market hasn't priced.
4. Short strangle — sideways, collecting premium (undefined risk)
Sell an OTM call and an OTM put. You keep both premiums if NIFTY expires between the strikes; beyond either, losses grow without limit. The most popular retail “income” strategy and the one that ends the most accounts, because a 3% gap does not care about your monthly average. If you trade it, size it as if that gap will happen — Chapter 11.
5. Iron condor — sideways, defined risk
A short strangle with wings bought further out. The wings cost part of the credit but cap the loss at width − credit, and slash the margin. This is how to express “range-bound this week” without the tail. Compare its max loss to the strangle above: that difference is the price of sleeping.
6. Iron fly — pinned to a strike, defined risk
Sell the ATM straddle, buy wings. Highest credit of the range strategies, narrowest profit zone: you are betting NIFTY expires very close to the strike. Best on expiry day itself when time value is high and there are only hours of movement left.
7. Long butterfly — cheap bet on a pin
Buy one call below, sell two at the target strike, buy one above. Tiny debit, large payoff if price expires exactly at the middle strike, nothing if it drifts far. Think of it as a lottery ticket with better odds than a naked OTM option because you are selling time value to fund it. The BFLY column on the Finostat sheet is this structure's live cost at every strike.
8. Ratio spread — slow drift, with a tail
Buy one call, sell two further out. Often a small net credit; maximum profit if price drifts up to the short strike; unlimited loss above it because one call is naked. Professional structure for “up a little, not a lot” when skew makes the higher strike rich. Not for the first month.
Matching view to structure
| Your view | IV today | Structure |
|---|---|---|
| Up, moderately | high | Bull call spread (or bull put spread) |
| Up, a lot, soon | low | Long call, or long straddle if unsure of direction |
| Down, moderately | any | Bear put spread |
| Sideways | high | Iron condor; iron fly on expiry day |
| Big move, unsure which way | low | Long straddle / strangle |
| Pin at a level | any | Butterfly |
Every one of these can be opened, edited leg by leg, and re-priced live in the terminal's builder — including on any F&O stock, not just the index.