Risk Disclosure

Trading options and futures carries a high risk of loss and is not suitable for everyone. This site documents strategies across the full risk spectrum, including several whose maximum loss is not capped by their structure.

Undefined-risk strategies

Of the 52 strategies documented here, 21 carry undefined risk: naked calls and puts, short straddles and strangles, and ratio spreads that are net short options. Their loss is bounded only by how far the underlying can move. A short call has no upper bound at all. Losses on these positions can exceed the premium collected many times over, can exceed the margin posted, and can leave you owing money to your broker. They are documented because a reference library that omits them is incomplete — not because they are suggested.

Risks that apply to every strategy here

• Leverage. Derivatives magnify both gains and losses; a small move in the underlying can produce a large percentage swing in your capital.
• Gap risk. Indian markets gap on overnight news. Stop-losses do not execute at your price across a gap, and defined-risk positions can jump straight to maximum loss.
• Gamma near expiry. Short-option positions become extremely sensitive close to expiry; a move that was harmless with a week left can be a full loss on expiry day.
• Volatility crush. A long-volatility position can lose money even when the direction is right, if implied volatility falls after a known event.
• Liquidity. Multi-leg positions in illiquid strikes can be impossible to exit at a fair price. Wide bid-ask spreads consume the theoretical edge of narrow spreads entirely.
• Assignment. Short legs on physically-settled stock options can be assigned, creating a delivery obligation you did not plan for.
• Costs. Brokerage, STT, exchange charges, stamp duty and GST are excluded from every figure on this site and are a material fraction of the maximum profit on narrow spreads.

The base rate

SEBI's published studies of the equity derivatives segment have found that a large majority of individual traders lose money, and that aggregate losses are substantial. Read that as the prior against which any strategy on this site should be evaluated.

Model limitations

Every Greek curve, decay curve and volatility-sensitivity curve on this site comes from a Black–Scholes model that assumes constant volatility, no jumps and continuous hedging. Real markets satisfy none of those. Our curves understate the danger of short-gamma positions and ignore volatility skew. See Methodology.

Never trade with money you cannot afford to lose. This site is educational only; see our SEBI Disclaimer.

Last updated 9 July 2026.