Bearish Risk Reversal
Sell an OTM Call to finance the purchase of an OTM Put, creating a zero-cost synthetic short position.
Interactive Payoff Curve & Greeks Simulation
Visualize the theoretical profit & loss at expiry vs T+0 immediate day curves. Drag the simulation slider to stress-test your trade.
Option Payoff Curve & Greeks
Net Option Greeks (Sensitivity Profile)
Values per 1 Lot standard unitMulti-Leg Position Structure (2 Legs)
| Action | Instrument / Strike | Type | Expiry | Approx Delta | Est. Premium | Qty Ratio |
|---|---|---|---|---|---|---|
| SELL | 1,720 CE (OTM) | CALL | Monthly Expiry | +0.25 | ₹24 | 1x |
| BUY | 1,580 PE (OTM) | PUT | Monthly Expiry | -0.25 | ₹24 | 1x |
How the Structure Works
Replicates short stock exposure with a free buffer zone between strikes.
A Bearish Risk Reversal sells an OTM Call to fully fund the purchase of an OTM Put. It allows an institutional trader to express a high-conviction short view with zero upfront cash capital.
Institutional Strike Selection Rules
Phased Execution Blueprint
Follow this structured sequence to eliminate emotional hesitation during order entry, lifecycle management, and final exit.
Bearish Conviction
Deploy when fundamentally bearish.
Interactive Margin & Position Size Calculator
Calculate exact lot sizing based on the 1-2% risk rule to preserve capital against Black Swan events.
Options Position Size & Max Risk Calculator
Total net liquid equity in your brokerage account
Recommended: 1.0% - 2.0% for disciplined longevity
Wing width max loss or defined mental/system SL
Rigorous Risk Rules & Adjustment Protocols
Non-negotiable parameters for stop-loss triggers, portfolio caps, and firefighting adjustments when market tests your strikes.
- Roll short call up.
Requires F&O short call margin.
HDFCBANK Bearish Risk Reversal Trade Walkthrough
HDFC Bank broke support post-merger.
Sold 1720 CE @ ₹24 / Bought 1580 PE @ ₹24 (Zero Net Cost)
- Captured massive downside with zero cash spent on puts.
Common Mistakes to Avoid
Why it happens: Focusing on zero entry cost.
Solution: Enforce strict stop loss.
Institutional Pro Tips
Bearish Risk Reversal FAQs
How is this different from buying a put?
Buying a put costs cash upfront and suffers theta decay. Risk reversal costs zero cash.
Alternative & Complementary Strategies
Sell an OTM Put to finance the purchase of an OTM Call, creating a zero-cost synthetic bullish position.
Buy an ATM Put and sell an ATM Call at the same strike to replicate 100% of the profit/loss of shorting stock or futures at lower execution friction.
Buy a higher ATM Put and sell a lower OTM Put to reduce trade cost, neutralize theta decay, and capture defined-risk downside profits.