Option Strategy: Short Put

SELL PUT OPTION Short Put means selling Put Option. This strategy is used when investors are very bullish on stock/index. when you sell put you earn premium from buyers you have sold someone the right to sell you the stock at the strike price.
For example, a trader is bullish on Nifty when it is 8011, he sells a put option with a strike price of 8000 at a premium of 155.75 Expiring on 26 November 2015. if Nifty index stays above 8000, he will gain the amount of premium as put buyer would not exercise his option. in case Nifty falls below 8000, put buyer will exercise the option and the trader will start losing money.
Selling Puts can lead to regular income in rising or rangebound market. This strategy can be considered as income generating strategy.
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