Strip Strategy Nifty Midcap Select: Setup, Payoff and Risk Guide
- August 25, 2026
- Posted by: Neeraj Pandey
- Category: Market
Nifty Midcap Select level used in this article: Rs 13,850 (as of illustrative reference level; verify current level on NSE). Next monthly (last Tuesday of the month) expiry: 25 August 2026 (Tuesday). Lot size 120. Weekly options on Nifty Midcap Select were discontinued in November 2024 under SEBI’s one weekly index per exchange rule; only monthly contracts remain.
Quick Answer
The strip strategy Nifty Midcap Select buys one at the money call and two at the money puts, all on the same strike and expiry, creating a weighted version of the long straddle that profits more from a downside move than an upside move of equal size. With Nifty Midcap Select at Rs 13,850, the strip strategy Nifty Midcap Select may be considered when a trader expects a large move in Nifty Midcap Select but leans bearish on the direction, wanting greater participation in a decline while still retaining some protection if the index rises instead. The net debit paid is the maximum loss, occurring if the index closes exactly at the strike at expiry.
The strip strategy Nifty Midcap Select modifies the standard long straddle by adding an extra put, shifting the payoff so that an equal magnitude move produces a larger gain on the downside than on the upside. This makes the this strategy a directional variant of the straddle, suited to a trader with a large move view and a bearish lean, rather than a purely neutral one. It is the mirror image of the strap strategy, which weights the payoff toward the upside instead.
Because it involves buying three options in total rather than two, the strip strategy Nifty Midcap Select costs more upfront than a standard long straddle, and this higher cost should be weighed against the benefit of the added downside participation.
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What Is the The position?
The strip strategy Nifty Midcap Select is a three leg options trade that buys one call and two puts, all at the same at the money strike and the same expiry. The net debit paid is the maximum loss, and profit potential is substantial in either direction, with a bearish tilt due to the extra put.
The legs of the this trade are:
- Buy one at the money call at the chosen strike, providing standard upside participation
- Buy two at the money puts at the same strike, providing amplified downside participation
Because there are two long puts against one long call, the strip strategy Nifty Midcap Select gains roughly twice as much for a given downside move as it does for an equivalent upside move, distinguishing it from a standard long straddle, which weighs both directions equally.
How Does the This options approach Work?
With Nifty Midcap Select at Rs 13,850, the strip strategy Nifty Midcap Select would be centred on the ATM strike of approximately 13,850, buying one call and two puts there. The position profits more from a decline past the lower breakeven than from an equivalent rally past the upper breakeven, reflecting the 2 to 1 weighting toward puts.
| Parameter | Details |
|---|---|
| Index | Nifty Midcap Select (MidcpNifty) (NSE) |
| Expiry | Monthly only, last Tuesday of the month. Effective September 2025 (NSE index expiry swap). Weekly contracts discontinued November 2024. |
| Lot Size | 120 units (effective from January 2026 per NSE circular, reduced from 140) |
| Strategy Type | Large move expected, bearish bias, net debit |
| Legs | 3 (one ATM call and two ATM puts, same strike) |
| Max Profit | Substantial (downside, amplified, limited by index falling to zero); substantial to unlimited (upside, standard) |
| Max Loss | Net debit paid at entry, times lot size |
| Margin | Varies dynamically. Check live margin on your broker’s calculator before placing any order. |
The spread: Step by Step Setup
- Identify the ATM strike from the Nifty Midcap Select option chain. With Nifty Midcap Select at Rs 13,850, the ATM strike for the strip strategy Nifty Midcap Select is approximately 13,850.
- Buy one ATM call at the chosen strike. This leg of the this strategy provides standard upside participation.
- Buy two ATM puts at the same strike. These two legs provide the amplified downside participation that distinguishes the strip strategy Nifty Midcap Select from a standard straddle.
- Calculate the total net debit. This equals the combined premium of the one call and two puts, multiplied by the lot size, for the the position.
- Calculate both breakeven points. Because of the unequal weighting, the lower breakeven for the strip strategy Nifty Midcap Select is closer to the strike than the upper breakeven, reflecting the smaller move needed on the downside to offset the total debit given the amplified put exposure.
Illustrative Payoff: Strip Strategy Nifty Midcap Select
Illustrative example for educational purposes only. Strikes and premiums are hypothetical and should not be interpreted as a trade recommendation.
Hypothetical setup: Buy one 13,850 CE at Rs 195 per unit and buy two 13,850 PE at Rs 185 per unit each. Total net debit: Rs 565 per unit. Lot size: 120 units. Total debit per lot: Rs 67,800.
| Nifty Midcap Select at Expiry | P&L Per Lot (approx, Rs) | Outcome |
|---|---|---|
| Well below 13,568 | Growing profit (amplified, two puts) | Put profit grows at roughly twice the rate of an equivalent rally |
| 13,568 (lower breakeven, approx) | 0 | Breakeven on the downside, reached sooner due to put weighting |
| 13,850 (at strike at expiry) | -67,800 | Max loss; all three options expire worthless |
| 14,415 (upper breakeven, approx) | 0 | Breakeven on the upside |
| Well above 14,415 | Growing profit (standard, one call) | Call profit grows linearly with the rally |
The strip strategy Nifty Midcap Select payoff table illustrates the bearish tilt clearly: the lower breakeven is reached with a smaller downside move than the upside move needed to reach the upper breakeven, and profits accelerate faster below the strike than above it.
Greeks for the Strip Strategy Nifty Midcap Select
Delta: The strip strategy Nifty Midcap Select starts with a net negative delta at entry, reflecting the two puts against one call, unlike a standard straddle which starts closer to delta neutral.
Gamma: The strip strategy Nifty Midcap Select is long gamma on both sides, but more strongly so on the downside given the extra put, benefiting disproportionately from a large decline.
Theta: Theta decay works against the strip strategy Nifty Midcap Select, and more so than a standard straddle since three options are decaying rather than two, increasing the total cost of time passing without a move.
Vega: The strip strategy Nifty Midcap Select is long vega across all three legs, benefiting from a rise in implied volatility after entry, with the effect proportionally larger than a standard straddle due to the extra option.
When the Strip Strategy Nifty Midcap Select May Be Considered
The strip strategy Nifty Midcap Select may be considered when a trader expects a large move in the index and has a bearish lean on the direction of that move; ahead of an event where a downside surprise is considered more likely than an upside one, while still wanting some upside protection; or as an alternative to an outright long put when some participation in an upside move is also desired.
When NOT to Use the Strip Strategy Nifty Midcap Select
Consider avoiding the strip strategy Nifty Midcap Select when you have no directional lean, in which case a standard straddle may be more cost efficient; when you expect a large upside move specifically, in which case a strap strategy weighted toward calls would be more appropriate; or when the higher cost of three options relative to a two leg straddle does not fit your budget for the position.
Risk Management
The strip strategy Nifty Midcap Select has limited defined risk equal to the total net debit paid. Because it costs more than a standard straddle, traders should set an explicit loss exit rule and reassess the position if the expected large move and bearish bias do not materialise within the relevant timeframe, since theta decay across three options accrues faster than on a two leg straddle.
Transaction Costs
The strip strategy Nifty Midcap Select involves three option legs, each with its own transaction costs. Brokerage, exchange transaction charges, STT, GST, SEBI charges, stamp duty, bid ask spread impact, and slippage on three legs at both entry and exit should be weighed against the amplified downside participation the strategy offers.
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Strip vs Other Nifty Midcap Select Large Move Strategies
| Strategy | Directional Bias | Legs | Relative Cost | Complexity |
|---|---|---|---|---|
| Strip | Bearish (2 puts to 1 call) | 3 | Higher than straddle | Medium |
| Strap | Bullish (2 calls to 1 put) | 3 | Higher than straddle | Medium |
| Straddle | None, neutral | 2 | Standard | Low Medium |
The strip strategy Nifty Midcap Select sits alongside the strap strategy as directional variants of the standard straddle, with the strip weighted toward downside participation and the strap weighted toward upside participation.
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Conclusion
The strip strategy Nifty Midcap Select is a directional variant of the long straddle, suited to traders who expect a large move in the index with a bearish lean on the direction. The added cost of the third option leg should be weighed against the benefit of amplified downside participation compared to a standard straddle. Always verify current lot size (120 units from January 2026) and expiry schedule before executing any trade, and consult a SEBI registered investment advisor if you are new to multi leg options strategies.
Disclaimer: Data and figures in this article are sourced from publicly available information and may or may not be accurate. All examples are illustrative and hypothetical only. Please verify all data including contract specifications, lot sizes, and expiry schedules with the official NSE (nseindia.com) and BSE (bseindia.com) websites before making any investment decision. Investments in securities are subject to market risk. This content is for educational purposes only and is not investment advice by Univest (SEBI RA INH000013776).
Frequently Asked Questions
What is the strip strategy Nifty Midcap Select?
Ans. The strip strategy Nifty Midcap Select buys one at the money call and two at the money puts on the same strike and expiry, creating a weighted straddle that profits more from a downside move than an equivalent upside move.
How does the strip strategy Nifty Midcap Select differ from a strap strategy?
Ans. The strap strategy weights the payoff toward the upside using two calls and one put. The strip strategy Nifty Midcap Select does the reverse, using two puts and one call to weight the payoff toward the downside.
What is the maximum loss in the strip strategy Nifty Midcap Select?
Ans. The maximum loss is the total net debit paid for all three options, multiplied by the lot size, occurring if the index closes exactly at the strike at expiry.
Why does the strip strategy Nifty Midcap Select cost more than a standard straddle?
Ans. Because it involves buying three options (one call and two puts) rather than two (one call and one put), the strip strategy Nifty Midcap Select requires a larger total premium outlay than a comparable straddle.
What is the current lot size for Nifty Midcap Select options?
Ans. The Nifty Midcap Select lot size is 120 units effective from January 2026, reduced from 140. Always verify the current lot size on nseindia.com before placing any order.
Is the strip strategy Nifty Midcap Select suitable for beginners?
Ans. The strip strategy Nifty Midcap Select has limited defined risk, making it relatively accessible, but understanding why the payoff is weighted toward the downside and the added theta decay cost of a third option is important before using it.
