No hedge this time
Two days ago I sold the BankNifty 57800 CE inside a spread because margin on the naked call was more than I wanted to commit. On 06-08 I took the same strike, the same bearish breakout read, and this time I sold it naked — one lot, no wing above it. It paid ₹1,500. I want to be very clear about why that number tells me almost nothing.
The trade
| Leg | Strike | Action | Premium | Lots | Units |
|---|---|---|---|---|---|
| Short call | 57800 CE | Sell | 555.15 | 1 | 30 |
BankNifty lot size is 30, so 1 lot = 30 units.
The math
| Metric | Value |
|---|---|
| Credit / unit | 555.15 |
| Total credit | 555.15 × 30 = ₹16,654.50 |
| Breakeven | 57800 + 555.15 = 58355.15 |
| Max profit | ₹16,654.50 (expiry below 57800) |
| Max loss | Uncapped |
| Result | +₹1,500 (CE fell ≈ 50 points, 555 → ≈ 505) |
The index stayed below the strike, the call bled about fifty points of premium, I bought it back, ₹1,500 booked. Clean and quick, ~9% of the credit.
The win that tests nothing
Here's the whole point of writing this up. The defining feature of a naked short call isn't the credit — it's the line at the top of that table that says max loss: uncapped. Everything above 58355 is mine to eat, and there's no number where it stops. The entire risk of the position lives beyond the breakeven.
And the breakeven never got tested. Not close. The index sat below the strike the whole time, the tail stayed asleep, and I collected. So what did this trade prove? That when BankNifty stays below 57800, a short 57800 call makes money. I did not need a live trade to know that. What I actually want to know — can I survive the day this gaps up through 58355 and keeps going — is exactly the thing a +₹1,500 win doesn't answer. It's the four-for-four problem again, and the tent's uncapped tail I still haven't seen hit: a run of wins on a structure whose risk has never once shown up is not evidence the risk is survivable. It's just evidence it hasn't happened yet.
What actually did the work
The one honest, defensible decision here is the size. One lot. Not because one lot felt lucky, but because when the loss has no ceiling, the only variable I control is how many units are exposed to it, and I sized so that a bad gap is a bruise and not a funeral. That's sizing against the tail, not against the credit — the credit is ₹16,654, the tail is unbounded, and I sized to the tail.
That's the difference between 04-08 and 06-08 worth keeping. On 04-08 the hedge was forced on me by margin. On 06-08 I chose to carry the naked tail, so the discipline had to come from position size instead of from a bought wing. It happened to be a quiet day and neither choice was tested. I'd rather assume the next one won't be quiet.
Disclaimer
This is a personal trading journal. It is a record of my own trades, my own money and my own mistakes — nothing more.
Nothing here is a trade recommendation, a tip, a call, or advice of any kind. I am not a registered adviser and I am not qualified to tell anyone what to do with their capital. The strikes, premiums, entries and exits above are what I did, not what you should do.
If you read this blog and place a trade because of it, that trade is yours. I accept no responsibility for anyone else's losses. Do your own research, size for your own risk, and understand that options can lose you more, faster, than you expect.