Introductory Context
"An institutional masterclass on selling OTM Puts against Short Futures positions on NSE to generate monthly cash flow while capping downside gains."
Strategy Dossier & Metadata Taxonomy
Strategy: Covered Put | Market: NSE Derivatives | Structure: Short Futures + Short OTM Put | Outlook: Moderately Bearish / Income
1. The Core Principle in Plain English
A Covered Put is the bearish equivalent of the Covered Call. You hold 1 lot of Short Futures and sell an Out-of-the-Money (OTM) Put option against it to collect upfront premium, dampening volatility and generating income in sideways-to-down markets.