Option strategies by capital requirement

Strategies grouped by the capital they tie up, from premium-only structures to naked-margin and collateral-backed ones — with the warning that margin used is never the same as risk taken.

Quick answer: Strategies by capital requirement groups structures under low, moderate, high, very high or varies, by the margin or premium they tie up. The central caution is that margin used is not risk taken — a defined-risk spread can cost little margin while a naked option's margin expands as it moves against you.

This page groups the library by the capital a structure ties up: low for premium-only buys, moderate for spreads that earn a margin benefit, high for naked short options, very high for positions backed by collateral or holdings, and varies where it depends on construction. The one idea to carry away is that margin used is not the same as risk taken. Margin is what the exchange and broker require you to post; risk is what the position can lose. The two can point in opposite directions — a defined-risk spread can tie up modest margin while capping a modest loss, whereas a naked short option can look affordable at entry and yet expose you to a loss far larger than the margin first posted. The sections below explain how F&O margin actually behaves and why a small account can still trade responsibly.

Low (premium only) (4)

Long Call A Long Call is the purchase of a call option, giving the holder the right but not the obligation to buy the underlying …
Long Put A Long Put is the purchase of a put option, giving the holder the right but not the obligation to sell the underlying a…
Long Straddle Long Straddle buys an at-the-money call and an at-the-money put on the same strike and expiry, so it profits from a lar…
Long Strangle Long Strangle buys an out-of-the-money call and an out-of-the-money put, so it costs less than a straddle but needs a l…

Moderate (spread margin) (21)

Bull Call Spread A Bull Call Spread buys a lower-strike call and sells a higher-strike call of the same expiry for a net debit, giving a…
Bear Put Spread A Bear Put Spread buys a higher-strike put and sells a lower-strike put of the same expiry for a net debit, a moderatel…
Bull Put Spread A Bull Put Spread sells a higher-strike put and buys a lower-strike put of the same expiry for a net credit, a moderate…
Bear Call Spread A Bear Call Spread sells a lower-strike call and buys a higher-strike call of the same expiry for a net credit, a moder…
Call Ratio Backspread A Call Ratio Backspread sells one lower-strike call and buys two higher-strike calls of the same expiry; being net long…
Calendar Spread A Calendar Spread sells a near-dated option and buys a longer-dated option at the same strike for a net debit, profitin…
Diagonal Spread A Diagonal Spread sells a near-dated option and buys a longer-dated option at a different strike, combining the time-de…
Vertical Spread A Vertical Spread combines a long and a short option of the same type and expiry but different strikes; the shared expi…
Horizontal Spread A Horizontal Spread, the taxonomic name for a calendar, pairs two options of the same strike and type whose expiries di…
Iron Condor An Iron Condor is a defined-risk neutral strategy that sells an out-of-the-money put spread and an out-of-the-money cal…
Iron Butterfly An Iron Butterfly is a defined-risk neutral strategy that sells an at-the-money put and call on one strike and buys win…
Long Butterfly A Long Butterfly is a defined-risk neutral strategy of three equally spaced call strikes — buy one lower, sell two midd…
Short Butterfly A Short Butterfly is a defined-risk, three-strike call strategy that collects a small credit kept only if the underlyin…
Long Condor A Long Condor is a defined-risk neutral strategy built from four call strikes for a debit, paying a flat maximum across…
Short Condor A Short Condor is a defined-risk strategy of four call strikes that collects a small credit kept only if the underlying…
Christmas Tree Spread A Christmas Tree Spread is a defined-risk, mildly bullish strategy built from calls in a 1×3×2 ratio — buy one lower, s…
Box Spread A Box Spread combines a bull call spread and a bear put spread on the same two strikes so the payoff is fixed at the st…
Broken Wing Butterfly A Broken Wing Butterfly is a defined-risk butterfly with deliberately unequal wing widths, skewed so the structure cost…
Reverse Iron Condor Reverse Iron Condor is a four-leg long-volatility structure — an iron condor with every leg reversed — that pays a capp…
Long Calendar Spread Long Calendar Spread sells a near-dated option and buys a far-dated option at the same strike, profiting from the faste…
Double Calendar Spread Double Calendar Spread places two calendars at different strikes — one below spot, one above — widening the single cale…

High (naked margin) (19)

Naked Put Naked Put is a short put held on margin rather than against reserved cash: the payoff is identical to a cash-secured pu…
Naked Call Naked Call is a short call with no underlying and no long call above it: the premium is the entire reward, while the lo…
Short Straddle Short Straddle sells a call and a put at the same strike, collecting both premiums to profit if the underlying barely m…
Short Strangle Short Strangle sells an out-of-the-money call and an out-of-the-money put, collecting both premiums to profit if the un…
Call Ratio Spread A Call Ratio Spread buys one call and sells two higher-strike calls of the same expiry, usually for a net credit; becau…
Put Ratio Spread A Put Ratio Spread buys one put and sells two lower-strike puts of the same expiry, usually for a net credit; because i…
Jade Lizard A Jade Lizard is a neutral-to-bullish strategy that sells an out-of-the-money put and an out-of-the-money call spread, …
Trend Following Trend Following is a futures approach that assumes returns are autocorrelated — that a move already underway is more li…
Breakout Trading Breakout Trading is a futures approach that assumes volatility clusters — that a period of contraction is followed by e…
Pullback Trading Pullback Trading is a futures approach that assumes an established trend persists through a temporary counter-move, so …
Mean Reversion Mean Reversion is a futures approach that assumes returns are negatively autocorrelated — that a market stretched away …
Momentum Trading Momentum Trading is a futures approach that buys instruments with strong recent returns and often shorts weak ones, bet…
Range Trading Range Trading is a futures approach that assumes a market stays within an identified band, so it buys near the floor an…
Gap Trading Gap Trading is a futures approach that positions around an opening gap, betting either that price fills back toward the…
Pair Trading Pair Trading is a futures approach that goes long one instrument and short a correlated other, aiming to profit from th…
Zero Days to Expiry (0DTE) Concepts Zero Days to Expiry concepts describe the day a contract expires, when at-the-money gamma reaches its maximum and delta…
Expiry Day Neutral Approaches Expiry Day Neutral Approaches are neutral option structures placed near the settlement zone on expiry, where the theta …
Expiry Day Volatility Concepts Expiry Day Volatility concepts describe how realised and implied volatility behave on the final day — measured intraday…
Theta Harvest Concepts Theta Harvest concepts describe collecting option time decay through short-premium positions, and the honest accounting…

Very high (collateral or holdings) (6)

Married Put A Married Put is the simultaneous purchase of the underlying and a protective put on it, bought together as one planned…
Protective Put A Protective Put is a put bought against an underlying already held, to insure existing holdings against a fall. The pu…
Synthetic Long Call A Synthetic Long Call is a long position in the underlying combined with a long at-the-money put, a pairing whose payof…
Synthetic Long Put A Synthetic Long Put is a short position in the underlying combined with a long at-the-money call, a pairing whose payo…
Covered Call Covered Call is a long position in the underlying with a call sold against it: the premium lowers the cost of the holdi…
Cash-Secured Put Cash-Secured Put is a short put backed by enough cash to buy the underlying at the strike if assigned: you collect a pr…

Varies (2)

Weekly Expiry Weekly Expiry refers to index option contracts that expire within days rather than a month, carrying less total time va…
Monthly Expiry Monthly Expiry refers to index and stock option and futures contracts that expire at month-end, carrying more total tim…

Margin used is not risk taken

The most expensive confusion on this page is treating the margin figure as the risk figure. They measure different things. Margin is collateral the system demands to cover a position; risk is the money the position can actually lose. A defined-risk spread is instructive: because a long leg caps the short leg, the exchange grants a margin benefit and the capital tied up is modest, and that modest margin corresponds to a genuinely capped loss. A naked short option is the opposite trap: its margin can look manageable at entry, yet the loss it can produce is far larger and, for a short call, structurally uncapped. Never size a position by asking what margin it needs; size it by asking what it can lose. The margin group on this page is a rough proxy for capital committed, not a measure of the danger involved, and the two must be read separately.

How SPAN and exposure margin actually behave

Indian F&O margin has two components. SPAN margin is computed by the exchange's risk model over a range of hypothetical moves in price and volatility, and exposure margin is an additional buffer on top. Both are recomputed through the day, and this is the part that catches people: a naked short option is not margined once at entry and left alone. As the underlying moves against the position, the model's worst-case scenarios worsen and the SPAN requirement expands, so a position that was fully margined at entry can breach its margin after an adverse move and be liquidated — often at the worst possible moment, in thin liquidity, by the broker's risk desk rather than by you. Defined-risk spreads largely escape this dynamic because their capped loss bounds the worst-case scenario the model can imagine. Brokers and NSE revise margin rules and rates, so the current framework should always be checked.

Why a small account can still size correctly

A modest account is not shut out of derivatives; it is shut out of doing them carelessly. A single NIFTY futures lot at 24,000, at a lot size of 75 at the time of writing, controls ₹18,00,000 of notional exposure, and a move of a few percent against it can exceed any sane risk budget for a small account in a single session — the notional, not the margin, is what can hurt you. A defined-risk structure lets the same account express a view while capping the loss to a figure it has chosen in advance, which is precisely what position sizing is for. The discipline is to fix the maximum acceptable loss first and let that determine the structure and the number of lots, rather than letting the available margin determine the size. For the full method, see the position-sizing guide at /risk/position-sizing.

Frequently asked questions

How are strategies grouped by capital requirement?

Strategies are grouped under low for premium-only buys, moderate for spreads with a margin benefit, high for naked short options, very high for collateral- or holdings-backed positions, and varies where it depends on construction. The grouping reflects capital tied up, not risk taken.

Is the margin I post the same as my risk?

No. Margin is the collateral the system requires; risk is what the position can lose. A defined-risk spread can tie up modest margin against a capped loss, while a naked option's loss can far exceed the margin first posted.

What are SPAN and exposure margin?

SPAN margin is computed by the exchange's risk model over a range of hypothetical price and volatility moves; exposure margin is an additional buffer on top. Together they form the F&O margin requirement, and both are recomputed through the trading day.

Can my margin requirement grow after I enter a trade?

Yes, on naked positions. As the underlying moves against a naked short option, the risk model's worst-case scenarios worsen and the SPAN requirement expands. A position fully margined at entry can breach margin after an adverse move and be liquidated.

Why do defined-risk spreads need less margin?

A defined-risk spread's long leg caps its short leg, so the worst case the risk model can imagine is bounded. The exchange grants a margin benefit reflecting that capped loss, which is why spreads tie up far less capital than naked options.

How much notional does one NIFTY futures lot control?

At spot 24,000 and a lot size of 75 at the time of writing, one NIFTY futures lot controls ₹18,00,000 of notional exposure. A move of a few percent against it can exceed a small account's entire risk budget in one session.

Can a small account trade options responsibly?

Yes, by using defined-risk structures and fixing the maximum acceptable loss before choosing size. The discipline is to let the chosen loss determine the number of lots, not to let available margin set the size. See /risk/position-sizing for the method.

Voice search & related questions

Does more margin mean more risk?

No. Margin used is not risk taken. A naked short option can require modest margin at entry yet expose you to a loss far larger than that margin, while a defined-risk spread ties up capital that corresponds to a genuinely capped loss.

Why did my broker increase my margin on an open position?

On naked positions, SPAN margin is recomputed through the day. As the underlying moves against you, the risk model's worst-case scenarios worsen and the requirement expands, which is why a position fully margined at entry can later need more or be liquidated.

Can I trade options with a small account?

Yes, using defined-risk structures that cap the loss to a figure you set in advance. A single futures lot controls ₹18,00,000 of notional at 24,000, which can overwhelm a small account, so fix the loss first and size to it.

Last reviewed 9 July 2026. Educational content only — not investment advice.