Selling the side the market is leaning away from

Two averages of the index, over twenty and fifty periods, and a measure called ADX that says whether a move has strength or is just drift. When the shorter average is above the longer and the ADX agrees there is a trend, the market is treated as rising, and a put is sold below the index with a cheaper put bought further below as insurance. The spread between them is the most the trade can lose.

The trade then wants only one thing: for the index not to fall through the sold level by expiry. It can rise, drift, or fall a little, and the premium is kept. The exits close it well before the full loss if the index does turn.

The worked example in the guide collects fifteen hundred rupees and can lose thirteen and a half thousand. Nine times the gain, on the losing side. People see that ratio and stop reading, and they are reading it the wrong way round.

The ratio is only half of the arithmetic. The other half is how often each outcome happens. For the trade to lose anything at all, the index has to fall more than a percent in three days against an established trend, and for it to lose the full amount, the index has to fall through the insurance level too, without any of the early exits firing first. The strategy's claim is that the small win happens far more often than the large loss, often enough that the two multiply out in its favour. That is a testable claim, which is the trouble: without option price history we cannot yet test it, and we will not list a strategy on the strength of an argument.

A small win nine times out of ten and a large loss once is a business. The same ratio seven times out of ten is a slow way to lose. Only a test tells you which this is.

Trend filters are late. By construction, two averages say 'uptrend' until some way after the turn, so the strategy will sometimes sell a put spread in the last days of a rise. When that happens the index falls, the sold put's delta climbs, and the exit closes the spread for a loss some way short of the maximum. That is the strategy working as designed, and it is also the main way it loses.

The classic adjustment is to add the other side, turning the losing spread into a condor, or to roll it down and out. Both add exposure to a trade the market has just disagreed with. The robot closes, and if the trend has genuinely flipped it will sell a spread on the new side at the next clean entry, as a new trade with its own cap.