In this blog post we will be understanding what is all about short put Option.
Let us suppose if Nifty is trading 22500 points. Now, if I say it will increase or above of 22500 then you will win. It is more like but where you are betting on the chance of increase in the Nifty Points. To exercise this one will receive the Premium of Option as the option is being sold. So, Here if the trend is with you you will get the premium as well as if it is against the trend then also it will protect till the value of premium is not overseeded.
Here , Seller will Receive the Premium of Rs 350 which means seller is protected in Nifty till 22500 – 350 = 22150 in Nifty. So, here Seller gets huge saftey if goes against the trend and protected till 22850. If say Nifty Expires at 22500 then also Seller makes the profit of Rs 350X50 = Rs 17500. So, be this way Seller Makes Profit even tough trend is against the Seller also. Seller makes Full Profit if Nifty expires at or above 22500 points.