In this tutorial, we are going to learn how to reduce the risk in a bearish strategy at the same time effectively use the margin. Currently Nifty is trading around 11200 levels in spot and expiry is around the corner. However Nifty hits the major supply zone (Resistance zone) 11000-11400 as shown below where institutional selling pressure is expected at higher prices.
While trading the debit strategies measuring the risk-reward ratio matters a lot for the options trader. Though you might have a bearish opinion about the market. However, the overall objective of the trader is to maximize the gain and minimize the losses.