Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

When to Execute Bearish Diagonal Put Spread

33 sec read

When to Execute this Strategy

When the Market Expectation is Bearish to Sideways or you are expecting choppy environments with a clear resistance and supports and at the same time you want to avoid if any extreme downside or upside risk as you are dealing with high volatile and uncertain environments.

Bear Call diagonal spread creation

Short 1 lot of 9250PE – Current week expiry @ 124.3/lot
Long 1 lot of 9400PE – next week expiry @ 277.50/lot

Breakeven levels are at 8505 – 9463 levels and the strategy also has limited risk and limited reward style which suits execution especially after a big gap down day where you have to come up with controlled thinking.

Reward will be maximum if Nifty Spot expires at 9250 levels.

What-If Scenario

UnderlyingExit DateProfit/LossPNL %
8,500.0014-May-20-75.72-0.66%
8,550.0014-May-20-6.07-0.05%
8,600.0014-May-2088.110.77%
8,650.0014-May-20213.461.86%
8,700.0014-May-20377.783.29%
8,750.0014-May-205905.13%
8,800.0014-May-20860.127.49%
8,850.0014-May-201,199.1310.44%
8,900.0014-May-201,618.7914.09%
8,950.0014-May-202,131.4118.55%
9,000.0014-May-202,749.5323.93%
9,050.0014-May-203,485.6030.34%
9,100.0014-May-204,351.5737.87%
9,150.0014-May-205,358.5246.64%
9,200.0014-May-206,516.2856.71%
9,250.0014-May-207,833.1068.17%
9,300.0014-May-205,565.3448.44%
9,350.0014-May-203,467.2830.18%
9,400.0014-May-201,540.9613.41%
9,450.0014-May-20-213.86-1.86%
9,500.0014-May-20-1,799.63-15.66%
9,550.0014-May-20-3,220.93-28.03%
9,600.0014-May-20-4,484.20-39.03%
Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

Nifty Overheated and Will Nifty Pullback?

Nifty is racing towards an all-time high and in the current swing most of the price action happens in the form of gap up...
Rajandran R
30 sec read

Bank Nifty Futures – Market Profile Charts and Overheated…

Bank Nifty Futures - Market Profile Charts and Overheated Emotions - September Series
Rajandran R
18 sec read

Nifty Futures – Increased Volatility and Downside Odds –…

Nifty Futures during the last couple of days are switching back to increased volatility. ATR is a greater measure of volatility. Because of the...
Rajandran R
36 sec read

One Reply to “When to Execute Bearish Diagonal Put Spread”

  1. Entry

    Short 1 lot of 9250PE – Current week expiry @ 124.3/lot
    Long 1 lot of 9400PE – next week expiry @ 277.50/lot

    Exit on Expiry on 14th May 2020

    Short 1 lot of 9250PE – Current week expiry @ 107/lot
    Long 1 lot of 9400PE – next week expiry @ 331/lot

    Net Gain from

    Short 1 lot of 9250 – Rs 17/lot
    Long 1 lot of 9400 – Rs 54/lot

    Total Gain = 71 points x 75 = Rs5325

Leave a Reply

Get Notifications, Alerts on Market Updates, Trading Tools, Automation & More