Arjun Trader

Earning a consistent daily income from the stock market is a dream for many traders. With a disciplined approach and proper risk management, it is possible to generate Rs. 1,000 daily using Sensex Option Selling with a capital of Rs. 1 lakh. In this article, we will explore a practical strategy to achieve this goal.

Understanding Sensex Option Selling

Options selling (also known as writing options) involves selling call or put options to earn a premium. Unlike buying options, where traders rely on strong directional movement, option sellers profit from time decay (Theta decay) and reduced volatility.

Why Sensex Options?

1. High Liquidity – Ensures smooth trade execution with minimal slippage.
2. Lower Volatility Compared to Nifty – Provides a stable trading experience.
3. Cash Settlement – No risk of delivery, as options are cash-settled.
4. Favorable Margins – Compared to Bank Nifty, Sensex requires lower margin requirements.

Strategy to Earn Rs. 1,000 Daily

1. Selecting the Right Expiry & Strike Price

• Trade weekly expiry options to take advantage of time decay.
• Choose OTM (Out of the Money) options with a delta of 0.15–0.20 to reduce risk.
• Look for strikes with a low probability of getting breached (1 standard deviation away from the spot price).

2. Selling a Credit Spread for Risk Management

To reduce unlimited risk, sell an Iron Condor or a Credit Spread:

• Bear Call Spread: Sell a higher strike call and buy an even higher strike call.
• Bull Put Spread: Sell a lower strike put and buy an even lower strike put.
• This limits risk and requires lower margin (around ₹35,000–₹40,000 per spread).

3. Targeting a Consistent Premium

• Aim to collect ₹500–₹600 premium per lot (i.e., ₹1,000 with two lots).
• Close positions when you have earned around ₹1,000 for the day (before Theta decay slows down).

4. Risk Management & Stop Loss

• Maintain a stop loss of 50% of the premium collected to protect capital.
• Hedge positions to limit exposure.
• Avoid selling options near major economic events (e.g., RBI policy, Fed announcements).

Example Trade Setup

• Capital Used: ₹1,00,000
• Trade Setup:
  • Sell 75,000 CE at ₹100
  • Buy 75,500 CE at ₹40
  • Sell 74,500 PE at ₹120
  • Buy 74,000 PE at ₹50
• Net Premium Collected: ₹130 (Rs. 100 + Rs. 120 – Rs. 40 – Rs. 50) per lot
• Max Profit: ₹2,600 per lot (assuming two lots for ₹1,000 target per day)
• Max Risk: Defined due to hedging, approximately ₹2,400 per lot.

Advantages of This Strategy

✅ Profits from time decay even in sideways markets.
✅ Requires less monitoring compared to intraday trading.
✅ Limited risk with proper hedging.
✅ High probability of consistent returns.

Final Thoughts

Earning ₹1,000 daily with ₹1 lakh capital using Sensex option selling is achievable with discipline, proper risk management, and a focus on Theta decay. Stick to a tested strategy, avoid overleveraging, and ensure consistent execution for long-term success.

Happy Trading! 🚀