How-to put option option writing short put cash-secured put SPAN margin Kite

How to sell a put option on Zerodha Kite

From WebNotes, a public knowledge base. Last updated 21 June 2026. Reading time ~12 min. Level: Advanced.

Key facts

Order type to write a put	Sell-to-open, product NRML (overnight) or MIS (intraday), on the NFO segment in Kite
Margin blocked	Full SPAN plus exposure margin; exposure for index option selling is 2% of contract value, 3.5% for stock options (NSE Clearing)
Premium	Credited to your account, but only the next trading day in the live account; the calculator shows it reducing the blocked amount
Obligation if assigned	You must buy the underlying at the strike; maximum loss is the strike minus the premium, down to a zero underlying
Stock-put settlement on ITM expiry	Physical: you must take delivery of the shares and pay the strike value, so a short put needs funds in the expiry week

Procedure

Confirm the F&O segment is active and margin is fundedActivate the F&O segment and ensure sufficient funds, since writing a put blocks the full SPAN plus exposure margin upfront, not just the premium received.
Find the put contract on KiteSearch the put contract on the NFO segment by underlying, expiry and strike in the Kite search bar, or open the option chain and pick the strike.
Open the sell order formClick Sell to place a sell-to-open order. Choose product NRML to carry the short put overnight, or MIS for an intraday position that is auto-squared-off.
Read the margin and premium display before confirmingReview the required SPAN plus exposure margin and the premium the order will credit. Confirm the margin is available, since a shortfall attracts a penalty.
Place the order and confirm the short positionSubmit the order. On execution the premium is credited (reflected in the live account the next trading day) and the trade shows as a short put in Positions.
Manage or square off before expiryMonitor the position and buy back the same contract to square off. An in-the-money short stock put left to expiry obliges you to take delivery of the shares at the strike.

Writing a put option means selling a contract, collecting the premium, and taking on the obligation to buy the underlying at the strike price if the buyer exercises. On Zerodha Kite this is a sell-to-open order on the NFO segment. The writer’s gain is capped at the premium received; the loss is the strike minus the premium, realised in full only if the underlying falls to zero. That makes a short put a large but bounded risk, the structural difference from the unlimited risk of a naked short call .

This guide covers the exact order on Kite, the SPAN plus exposure margin Zerodha blocks before it accepts the order, when the premium reaches your account, the assignment obligation, the physical-settlement trap on single-stock puts, the cash-secured-put framing, and how to square off. Read it with naked option selling margin on Zerodha for the capital arithmetic and the SEBI study on retail F&O losses , which found about 91% of individual derivatives traders lost money in FY2024, with aggregate net losses near Rs 75,000 crore.

Conflict-of-interest disclosure. This guide is published by the WebNotes Editorial Team for informational purposes and is written independently. WebNotes operates a Zerodha account-opening referral programme, disclosed on the pages that carry the referral link; this guide does not carry it and earns no referral commission from the procedure described here.

Step-by-step procedure

The procedure infobox at the top of this guide lists the sequence as structured steps. The H3 sections below expand each one, with the order-form fields, the margin display, and the failure modes that catch first-time put writers.

1. Confirm the F&O segment is active and margin is funded

Writing options needs the F&O segment enabled. Activate it from Console under Account then Segments if it is not on; income proof may be required. Unlike buying a put, where you only pay the premium, writing a put blocks the full SPAN plus exposure margin upfront. Fund the account with cash, or pledge holdings for collateral, before placing the order, and respect the 50:50 cash-collateral rule : at least half the margin must be cash or cash-equivalent, so pure collateral will not carry a short put on its own. For a cash-secured put, hold the strike value in addition, so you can take delivery if assigned.

2. Find the put contract on Kite

Press the search key in Kite and type the underlying, for example NIFTY for the index or RELIANCE for a stock. Select the NFO exchange rows, then pick the expiry, the strike, and the put leg, which Kite labels PE (Put European). A contract reads as NIFTY 26JUN 25000 PE: Nifty, the 26 June expiry, the 25000 strike, a put. All NSE equity and index options are European-style, exercisable only at expiry. Add the contract to a marketwatch slot.

3. Open the sell order form

Hover over the contract and click S to open the sell order form. Selling here means sell-to-open: you are creating a new short put, not closing a long. The defaults:

Product: NRML to hold the short overnight or to expiry; MIS for an intraday-only write that auto-squares before the cut-off.
Order type: Limit, set near the current bid. A market order on a wide put spread, common on out-of-the-money strikes and far expiries, can fill far below the last traded price and shrink your premium.
Quantity: in lots. Confirm the lot size, since the Nifty lot is 75 after the October 2024 revision and the margin scales with it.

4. Read the margin and premium display before confirming

For a sell order, the form shows the margin required, the SPAN plus exposure figure the position will block, with the premium shown separately as a receivable. The arithmetic that trips people up: the displayed margin used is the gross SPAN plus exposure, and the premium credit only partly offsets it. For one naked Nifty short put near the money you might see roughly Rs 1.5 lakh to Rs 2 lakh blocked per lot, against a premium of a few thousand rupees. Read option premium credit on Kite funds for how the credit and the block interact on the funds page.

5. Place the order and confirm the short position

Click Sell, review the confirmation modal showing the instrument, side, quantity, price, and estimated margin, and submit. A limit order sits in the exchange order book until the market trades at your price; a filled order moves to Positions, where the short put shows as a negative quantity. The position P&L runs against you as the put premium rises (the underlying falling) and in your favour as it falls (the underlying holding or rising).

6. Manage or square off before expiry

To close, buy back the same contract. No fresh margin is needed to square off a short, provided you hold no pending order on that contract; a stray pending order is read as a new position and demands margin. On a profitable short, the buy-back still shows as a cash debit, because you are repurchasing the option you sold; the realised profit is the premium received minus the buy-back cost. For an in-the-money short stock put, square off before the expiry-day cut-off if you do not want to take delivery and pay the strike value.

Margin: why a naked short put is capital-intensive

Zerodha blocks the full SPAN plus exposure margin on a naked short put because nothing offsets the worst-case loss. SPAN, the exchange’s Standard Portfolio Analysis of Risk engine, sizes the margin to the maximum probable one-day loss and revises it through the day. Exposure margin sits on top: NSE Clearing sets it at 2% of contract value for index option selling and 3.5% for stock option selling, where contract value is spot times lot size. For a Nifty contract around 25000 with a 75 lot, the notional is about Rs 18.75 lakh, and the exposure slice alone is near Rs 37,500.

Component	Naked short index put (Nifty, one lot)	Basis
SPAN margin	About Rs 1.1 lakh to Rs 1.5 lakh	NSE SPAN engine, revised intraday
Exposure margin	About 2% of contract value	NSE Clearing exposure rate for index option selling
Total margin blocked	About Rs 1.5 lakh to Rs 2 lakh	SPAN plus exposure, the NRML overnight margin
Premium received	Credited next trading day	Zerodha funds settlement, T+1

The figures move with spot, volatility, and the strike, so confirm the live number on the Zerodha margin calculator before every trade. Two add-ons raise it: additional margin for selling index options layered on by SEBI and the exchanges, and higher margin near expiry as exchanges raise rates into the expiry session. A hedged short put, where you also buy a lower put, qualifies for exposure margin relief and blocks a fraction of the naked figure; the naked structure forfeits that benefit.

The premium: credited, but settled T+1

When you write the put, the premium is credited to your trading account, but in the live account it reflects only the next trading day, even though the margin calculator nets it against the blocked amount the moment you model the trade. So the cash you can redeploy lags the trade by a day. The credit counts toward the cash component of your F&O margin, which helps put writers running several shorts meet the 50:50 cash requirement . For the funds-page mechanics, see option premium credit on Kite funds .

A point that confuses new writers: a profitable short put still shows a debit when you buy it back. You sold the option to open and must repurchase it to close, so the buy-back is always a cash outflow. The trade is profitable when that outflow is smaller than the premium you took in. See option premium for why the buy-back debit and the net profit differ.

The assignment obligation and bounded loss

A short put’s payoff is the mirror of a long put’s. The buyer profits as the underlying falls below the strike minus premium. If the underlying is below the strike at expiry, the put is in the money and you are assigned: you must buy the underlying at the strike, well above the market price. Your loss is the strike minus the spot, offset by the premium you collected. Because the underlying cannot fall below zero, the maximum loss is the strike minus the premium per share, multiplied by the lot. That bound is the structural contrast with a short call , whose loss is unlimited.

Bounded is not small. A naked short put on a Rs 3,000 stock at a 2,900 strike risks roughly Rs 2,900 per share if the stock collapses, many times any premium collected. SEBI tightened F&O participation through the entry-barrier rules of 2024 partly because retail writers underprice this tail. The defence is the put spread : buy a lower-strike put to cap the loss at the gap between strikes and cut the margin sharply.

Cash-secured put: framing the trade as a discounted buy

A cash-secured put is a short put backed by enough cash to buy the underlying at the strike if assigned. The framing changes the trade from open-ended income into a way to buy a stock you already want, at an effective price of the strike minus the premium. If the underlying stays above the strike, the put expires worthless and you keep the premium. If it falls below, you take delivery at the strike, having lowered your entry cost by the premium. The discipline is holding the strike value as cash, not just the margin, so assignment does not force a scramble for funds. On a single-stock cash-secured put, assignment means physical delivery, covered next, so the cash must be ready to pay the full strike value of the lot.

Physical settlement on an in-the-money stock put

All single-stock options on the NSE are compulsorily physically settled at expiry; index options on Nifty and Sensex are cash-settled. For a short put the distinction is decisive. If your short stock put is in the money at expiry, you take delivery of the underlying shares at the strike and pay the full strike value of the lot. Zerodha ramps up delivery margin through the expiry week on positions heading for physical settlement, issues email and SMS alerts when a stock option moves into the money, and the obligation crystallises at the 3:30 PM expiry-day cut-off.

The trap mirrors the short call: an out-of-the-money short stock put early in the expiry week can drift into the money by Thursday and convert a small premium trade into a delivery obligation worth many lakhs. STT compounds it, levied on the intrinsic value of exercised options, currently 0.15% after the 1 April 2026 Budget hike, up from 0.125% under the October 2024 regime. For the mechanics see physical settlement of stock F&O , how to physically settle an ITM option , and how to avoid physical settlement . The do-not-exercise facility has been largely withdrawn after the close-to-money rules changed, so a writer cannot rely on it; see the do-not-exercise option and physical-delivery risks in F&O .

Charges and STT on a written put

Zerodha charges a flat Rs 20 brokerage per executed order on options, on both the sell-to-open and the buy-to-close legs. On top sit STT, exchange transaction charges, GST, SEBI turnover fees, and stamp duty. STT on the sale of options is charged on the premium, currently 0.15% on the sell side after the 1 April 2026 Budget, up from 0.1%. On an exercised in-the-money option the STT is 0.15% of the intrinsic value, the figure that can swamp a thin profit and the standing reason to close in-the-money positions before expiry. For the full breakdown see Zerodha F&O charges , options exercise charges on Zerodha , and the STT hike of October 2024 . The realised P&L is taxed as F&O business income; see F&O taxation in India .

What can go wrong

Treating the premium as free cash on trade day. The premium credits to your account but settles only the next trading day in the live account.
Confusing margin with assignment funds. The blocked margin covers the open position, not the strike value you owe if a stock put is assigned and physically settled. Hold the strike value for a cash-secured put.
Underestimating the bounded loss. A short put can lose the strike minus the premium per lot, large even though it is not unlimited. Size the position to that figure, not the premium.
Ignoring physical settlement. A short stock put in the money at expiry means delivery and paying the full strike value. Square off before the cut-off if you cannot.
A market order on a wide spread. Out-of-the-money and far-expiry puts have wide spreads; a market sell can fill below the last price. Use a limit order.
A stray pending order on square-off. Squaring off a short needs no fresh margin, but a pending order on the same contract is read as a new position and blocks the exit.

External references

References

Zerodha support, How is the margin calculated for selling options? (as of 21 June 2026): full SPAN plus exposure margin, premium credited next trading day.
NSE Clearing, SPAN and exposure margin framework: exposure margin 2% of contract value for index option selling, 3.5% for stock option selling.
Zerodha charges, zerodha.com/charges (as of 21 June 2026): STT 0.15% on options sell side on premium, 0.15% on intrinsic value of exercised options, flat Rs 20 brokerage per executed order, effective 1 April 2026 per Budget 2026-27.
SEBI, Study on profit and loss of individual traders in the equity F&O segment, FY2024: about 91% of individual traders incurred net losses.
NSE, Physical settlement of stock derivatives: all single-stock options compulsorily physically settled at expiry.

Frequently asked questions

How much margin does Zerodha block to sell one put option?

The full SPAN plus exposure margin. For a single naked Nifty short put this runs roughly Rs 1.5 lakh to Rs 2 lakh per lot. Exposure margin alone is 2% of contract value for index options and 3.5% for stock options, per NSE Clearing.

What is my obligation if my short put is assigned?

You must buy the underlying at the strike price. The maximum loss is the strike minus the premium received, realised only if the underlying falls to zero. That makes a short put a large but bounded risk, unlike a naked short call.

What happens if my short stock put expires in the money?

All NSE single-stock options are physically settled. An in-the-money short put obliges you to take delivery of the shares at the strike and pay the full strike value, so you need the cash in the expiry week. Zerodha alerts you by email and SMS.

What is a cash-secured put?

Writing a put while holding enough cash to buy the underlying at the strike if assigned. It frames the short put as a way to buy a stock you want at a lower effective price, the strike minus the premium, rather than an open-ended income trade.

Does the premium reach my account immediately when I write a put?

It is credited to your trading account, but in the live account it reflects only the next trading day. The Zerodha margin calculator nets it against the blocked margin the moment you model the trade, but the cash settles T+1.

Is selling puts safer than selling calls?

The loss is bounded rather than unlimited, because an underlying cannot fall below zero, but a short put can still cost the strike minus the premium per lot. SEBI’s FY2024 study found about 91% of individual F&O traders lost money overall.

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WebNotes Editorial Team

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Last reviewed: 21 June 2026
Conflicts of interest: WebNotes is independent. No relationship with any broker, registrar or bank named in this article.