Market corrections hurt — unless you're hedged. Learn how to use Nifty put options to protect your long-term equity portfolio during downturns.
What is a Put Option?
A put option gives you the right (but not the obligation) to sell an underlying asset at a specified strike price. Its value increases as the market falls.
Portfolio Insurance
Think of buying put options as buying insurance for your portfolio. You pay a small premium. If the market crashes, the profit from your put options offsets the losses in your stock portfolio.
How to Implement
If you hold a ₹10 Lakh equity portfolio that closely mirrors the Nifty 50, you can buy Nifty Put Options equivalent to that notional value. While this strategy caps your downside risk during events like elections or global crises, it does have a cost (the premium paid), which can drag down overall returns in a flat or bullish market.