Nifty Credit Spread Strategy — Bull Put & Bear Call Spreads

Credit spreads are the workhorse strategy for Nifty weekly income traders — they offer defined risk, consistent returns, and the mathematical advantage of selling overpriced implied volatility. A bull put spread profits when Nifty stays above a certain level; a bear call spread profits when it stays below. This guide covers strike selection, margin requirements, and the weekly deployment framework for Nifty credit spreads.

Bull Put Spread — Setup

The bull put spread is used when you have a neutral-to-bullish view on Nifty:

• Sell: OTM Put (e.g., 22,800 PE at Rs 45)
• Buy: Further OTM Put (e.g., 22,700 PE at Rs 25)
• Net credit: Rs 20 per unit = Rs 500 per lot (25 units)
• Max profit: Rs 500 per lot (if Nifty stays above 22,800 at expiry)
• Max loss: (Spread width - premium) x lot size = (100 - 20) x 25 = Rs 2,000 per lot
• Breakeven: 22,800 - 20 = 22,780
• Margin required: Approximately Rs 40,000-50,000 per lot

Bear Call Spread — Setup

Used when you have a neutral-to-bearish view:

• Sell: OTM Call (e.g., 23,300 CE at Rs 40)
• Buy: Further OTM Call (e.g., 23,400 CE at Rs 20)
• Net credit: Rs 20 per unit = Rs 500 per lot
• Max loss: Rs 2,000 per lot
• Breakeven: 23,300 + 20 = 23,320

Strike Selection Framework

Recommended: Sell at 200 points OTM (approximately 1 standard deviation) with 100-point wide spreads. This gives a 75-80% win rate with meaningful premium.

Weekly Deployment Rules

• Enter Monday or Tuesday for that week's Thursday expiry
• If weekly OI support is at 22,800, sell your put spread at 22,700/22,600 (below OI support)
• If weekly OI resistance is at 23,300, sell your call spread at 23,400/23,500 (above OI resistance)
• Combine both for an iron condor when view is neutral
• Close at 80% of max profit — do not hold to expiry for the last 20%

Adjustment Rules

• If the short strike is breached intraday, do NOT panic. Check if the close will be beyond it.
• If Nifty closes beyond your short strike, roll the spread: close the current spread (take the loss) and open a new spread further OTM in the next expiry
• Maximum adjustment: 1 roll. If the second spread also gets breached, take the loss and move on.
• Never widen the spread to collect more premium — this increases risk disproportionately

Conclusion

Credit spreads on Nifty offer the best risk-adjusted approach to weekly options income. The defined-risk nature means you know your maximum loss before entering. Sell at 200 points OTM for 75-80% win rate, use 100-point spread widths, and close at 80% of max profit. Combined with OI-based strike selection and one-roll adjustment rules, credit spreads can generate consistent 1-2% weekly returns on capital deployed.