NIFTY has Bear Put trade setup using November 2019 options.
#NIFTY is approaching zone 11900-12000. After running through the supply at 11700, the bulls are going to be exhausted for some time. A pullback of at least 300 points can be expected that gives opportunity for a bear put spread trade.
At the time when NIFTY hit 11906 on 31st October morning, the put option chain looked as follows-
We are discussing bear put spread using 11900-11800 November Put options.
NIFTY @ 11906
Buy NIFTY NOV2019 11900 PE @Rs 182.95 Sell NIFTY NOV2019 11800 PE @Rs 148.80
Net debit Rs 34.14
(Multiply above number by 75 to get net debit for long-short lots for your risk management. Here the net premium paid will be Rs 34.14 X 75 = 2560.5. In the trade here we have given the premium alone, not premium per lot)
Max profit = difference in strikes – premium paid = ((11900 - 11800) – 34.15) = 65.85 Max loss = net premium paid = 34.16
Exit conditions – If any of the following condition is true, we would exit the trade
1. Spread premium hits 70 (i.e. 2X)
2. If spread premium drops below 17 (i.e. 0.5X)
3. If NIFTY trades above 12100