--- title: "Why hedge with Nifty puts: what the cover costs and buys" description: "Why people hedge with a Nifty put, what the cover costs, why it costs more after a fall, and whether a put every month is worth it, on dated NSE data." source_url: "https://www.rupeecase.com/learn/path-17/module-17-4-why-hedge" --- [Path 17 4 of 23](/learn/path-17/)Why and when to hedge: insurance in plain numbers[Next 17.5](/learn/path-17/module-17-5-straddles-and-strangles) Wednesday 10 Jun 2026. The Nifty 22,500 put, 3.2% below the June future, settled at 94.55 a unit. For one lot of 65 units that is Rs 6,146. On Tuesday 30 Jun it expired worthless: Nifty closed at 23,865.75, 2.7% above the future. Was the money wasted? Ask a different question. What did it buy? Twenty days in which the loss on a lot of the future had a floor. I think of a hedge as a bill, not a bet. This lesson puts numbers on the bill, on what it buys and on when the bill runs high. Every figure is from NSE end of day files and dated, so nothing is live and none of it says where Nifty goes next. 3By the end you can 1. Read a put hedge as insurance: premium, deductible, cover, term and claim. 2. Work out what cover costs as a share of the holding, and why it costs more after a fall. 3. Say why a loss needs a bigger gain to undo, and what a put every month adds up to. Watch in the terminal: which numbers am I looking at? A short tutorial on sample data. ## The idea, plainly ### What is a hedge? A hedge is a position you take to cut a risk you already carry. It does not make money. It costs money and removes some loss. The easiest way to read a put hedge is as an insurance policy. | Insurance | Put hedge | June 2026 example | | --- | --- | --- | | Premium | The put's price | 94.55 a unit | | Deductible | Points from the future down to the strike | 740.10 points | | Cover | Lots, each of 65 units | One lot | | Term | Days to expiry | 20 days | | Claim | The put's value at expiry, if any | None on 30 Jun | ### Why hedge at all? Losses are lopsided. Nifty closed at 25,471.10 on 13 Feb 2026 and at 22,331.40 on 30 Mar, a fall of 12.3%. To get back to the 13 Feb close it needed a rise of 14.1%. On 10 Jul 2026 it was still 5.0% under it. A hedge is for a loss big enough to change what you do next. People hedge for one of two reasons. A date: money that must be there on a known day, such as a loan, a fee or a purchase. A size: a holding so large that a fall of this kind would change plans. A hunch is not on the list. A hunch is a view, and a hedge placed on a view is a bet. There are three ways to take loss off the table, and only one keeps the upside. Three ways to cut a loss, and only the put keeps the gains The put is the one with a bill. The other two cost no premium and give up the upside as well. Source: RupeeCase, from NSE contract specifications. As of 16 Oct 2026. ### What does cover cost? The further the strike sits below the future, the less the put costs, because you carry more of the loss yourself. On 10 Jun 2026 the 23,000 put, 1.0% below the future, cost 0.95% of it. The 22,500 put, 3.2% below, cost 0.41%. The 22,000 put, 5.3% below, cost 0.17%. The nearer the strike, the dearer the cover Settlement prices of the June monthly expiry, 20 days left. The loss between the future and the strike is carried by the holder. Source: NSE end of day data, computed by RupeeCase. As of 10 Jun 2026. ### When is cover dear? Fear sets the price. When India VIX jumps, puts jump with it. On 7 Apr 2025, with VIX at 22.79, the put 3.0% below the future cost 1.30% of it and the one 5.0% below cost 0.93%. On 10 Jun 2026, at 15.63, the puts 3.2% and 4.9% below cost 0.41% and 0.20%. Cover is cheaper on calm days and dearer after a fall. The same cover cost several times more in a fearful session Monthly Nifty expiry, put premium as a share of the future. India VIX closed at 22.79 on 7 Apr 2025 and at 15.63 on 10 Jun 2026. Days left were 17 on 7 Apr 2025 and 20 on 10 Jun 2026. Source: NSE end of day data, computed by RupeeCase. As of 10 Jun 2026. ### Is buying puts every month worth it? A put bought every month is a standing bill, twelve payments a year. At June's price for the 22,500 put, twelve payments come to 4.9% of the holding before any fall. A thirty day put costs more than this twenty day one, so the real bill is higher. Against it stands the fall: 12.3% from 13 Feb to 30 Mar 2026. The 24,000 put bought on 2 Feb 2026 for 130.25 a unit paid Rs 1,08,459 a lot at expiry. Both months are real and neither is a verdict. Whether twelve payments are worth a protected fall depends on what you can afford to lose, on how long you can wait and on the price of cover that day. The bill is certain. The fall is not. Holding less equity, or keeping cash aside for the known date, also limits the damage with no premium to pay, though the gains shrink too. ## Worked example: one lot, two months A holder of one lot of the Nifty future buys a put on the same day and holds both to expiry. The June put is the 22,500 from above. The second is the March 24,000 put bought on 2 Feb 2026, 5.1% below the future of 25,297.40, with 56 days to run. Both expiries settled on the index close, the rule for expiries before 7 Dec 2026. | One lot | 10 to 30 Jun 2026 | 2 Feb to 30 Mar 2026 | | --- | --- | --- | | Future at the start | 23,240.10 | 25,297.40 | | Put bought | 22,500 | 24,000 | | Premium a unit | 94.55 | 130.25 | | Cost of one lot | Rs 6,146 | Rs 8,466 | | Nifty close at expiry | 23,865.75 | 22,331.40 | | Put value at expiry, one lot | Expired worthless | Rs 1,08,459 | | Holding without the put | Rs 40,667 | −Rs 1,92,790 | | Holding with the put | Rs 34,522 | −Rs 92,797 | Nifty fell through the put's strike, and the put paid for every point below it Daily close of the Nifty 50. The line is the strike of the put bought on 2 Feb 2026. Source: NSE end of day data, computed by RupeeCase. As of 30 Mar 2026. Read 2 more paragraphs, 134 words In June the put cost Rs 6,146 and the holder earned that much less than the bare future. In February and March the same kind of cover turned a loss of Rs 1,92,790 into Rs 92,797. The index dropped below the strike of 24,000 and the put paid for every point under it. A put exercised at expiry also carries STT on its intrinsic value. On 30 Mar 2026 the rate was 0.125%, so here Rs 135.57. From 1 Apr 2026 it is 0.15%. Two months show the shape, not how often it happens. All prices are settlement prices. Real cover is bought at an ask and costs brokerage as well. The payoff builder below opens on a nearer strike. Set the put to 22,500 to draw the June row. ## The common mistake The belief: A hedge that expires worthless was wasted money. Test it on the table. The June put expired worthless and cost Rs 6,146. It bought twenty days of a floor. The put bought on 2 Feb 2026 paid Rs 1,08,459 on a premium of Rs 8,466. Judging a hedge by whether it paid is like judging fire cover by whether the house burned. The other side is just as wrong: a hedge is not free and not always worth it. Judge it by the loss it removes at a price you can carry, and set that against twelve premiums a year. ## Key takeaways * A hedge cuts a risk you hold. It costs money and earns none. * A put hedge reads like insurance: premium, deductible, cover, term, claim. * A 12.3% fall needs a 14.1% rise to undo. * Cover costs more after a fall, when India VIX is high. * A put every month is a standing bill of twelve payments a year. * An unused hedge still bought cover. Judge it by the loss it removed. 3 terms this section turns on From the module glossary; every term is in the Learn glossary too. Source: Module 17.4, Why and when to hedge: insurance in plain numbers. **Before you trade.** Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. [Read the SEBI study](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html) What does Why and when to hedge: insurance in plain numbers cover?A put as an insurance policy: premium, deductible, cover, term and claim. What it cost in a calm month, and what it paid in a fall. It works through The idea, plainly, Worked example: one lot, two months, The common mistake, Key takeaways. It is module 17.4 of Path 17, Strategies and Hedging, about 8 minutes of reading, free. TTry it ## Payoff builder, on the same example. Legs from a dated chain, the expiry and before expiry curves, breakevens and the charges. Dated NSE end of day data, nothing live, no orders. **Payoff builder**, Nifty, 10 Jun 2026, 30 Jun 2026 expiry. [Open the payoff builder](/learn/tools/payoff-builder?chain=NIFTY_2026-06-10_2026-06-30&preset=protective-put) AF&O on RupeeCase ## Hedging only, in development F&O at RupeeCase will do one job: protect a portfolio you already own, by a rule published before it runs. No speculation, no naked option selling, no leveraged bets. It is not available yet. [How hedging will work](/hedging)[Sign up for RupeeCase](https://invest.rupeecase.com/signup) [No hedgeFalls with the marketWith a putA floor, for a premiumIllustration with made up numbers, not a product and not a recommendation.](/hedging) QQuick check ## 10 questions, 7 to pass. Each attempt draws 10 of the 15 questions in this module's bank, and a retake draws a fresh set. A pass gives this module's Certificate of Completion. Your result stays on this device and counts towards the Path 17 certificate. 7 of 10 correct passes module 17.4 Every answer is explained when you check; a retake is always free. Source: RupeeCase Learn quiz rules (70% to pass). Passed ### Certificate ID Download PNGPrint or save as PDF[Check the ID](/learn/certificates/verify) Self paced and unproctored. A record of completing free education by RupeeCase; not a NISM certificate and not endorsed by NISM, NSE, BSE or SEBI. It qualifies no one to deal, advise or publish research. CCheck yourself ## Path 17 so far. Your quick check results on this device, stop by stop. Stop 4 of 23 on Path 17 Strategies and Hedging: every live stop, this module ringed. Source: RupeeCase Learn, Path 17. 1. [17.1Reading and building payoff diagramsNot yet](/learn/path-17/module-17-1-payoff-diagrams) 2. [17.2Vertical debit spreads: bull call and bear putNot yet](/learn/path-17/module-17-2-bull-call-and-bear-put-spreads) 3. [17.3Covered call, protective put and cash secured putNot yet](/learn/path-17/module-17-3-covered-call-and-protective-put) 4. [17.4Why and when to hedge: insurance in plain numbersNot yet](/learn/path-17/module-17-4-why-hedge#quiz) 5. [17.5Straddles and strangles, long and shortNot yet](/learn/path-17/module-17-5-straddles-and-strangles) 6. [17.6Credit spreads: bull put and bear callNot yet](/learn/path-17/module-17-6-credit-spreads) 7. [17.7Iron condor and iron fly on NiftyNot yet](/learn/path-17/module-17-7-iron-condor-and-iron-fly) 8. [17.8Butterflies and broken wing butterfliesNot yet](/learn/path-17/module-17-8-butterflies) 9. [17.9Option calendar spreadsNot yet](/learn/path-17/module-17-9-option-calendar-spreads) 10. [17.10Choosing a strategy by view: direction, volatility and timeNot yet](/learn/path-17/module-17-10-strategy-by-view) 11. [17.11Adjustments: what they really do to riskNot yet](/learn/path-17/module-17-11-option-adjustments) 12. [17.12Expiry day: gamma, theta, settlement and the rulesNot yet](/learn/path-17/module-17-12-expiry-day) 13. [17.13Hedging a stock portfolio with Nifty putsNot yet](/learn/path-17/module-17-13-hedging-with-nifty-puts) 14. [17.14Collars and put spreads as cheaper hedgesNot yet](/learn/path-17/module-17-14-collars-and-put-spreads) 15. [17.15Hedging mutual fund portfolios: beta and basisNot yet](/learn/path-17/module-17-15-hedging-mutual-fund-portfolios) 16. [17.16Ratio spreads and backspreadsNot yet](/learn/path-17/module-17-16-ratio-spreads-and-backspreads) 17. [17.17Diagonals and double calendarsNot yet](/learn/path-17/module-17-17-diagonals-and-double-calendars) 18. [17.18P&L attribution by GreeksNot yet](/learn/path-17/module-17-18-pnl-attribution-by-greeks) 19. [17.19Event hedging with event varianceNot yet](/learn/path-17/module-17-19-event-hedging) 20. [17.20Tail hedging and long dated Nifty optionsNot yet](/learn/path-17/module-17-20-tail-hedging) 21. [17.21Hedging an option selling book: wings, vega, gaps and margin stressNot yet](/learn/path-17/module-17-21-hedging-an-option-selling-book) 22. [17.22Kelly and sizing for option strategiesNot yet](/learn/path-17/module-17-22-kelly-sizing) 23. [17.23Risk for option books: scenarios, stress, VaR, ES and margin shocksNot yet](/learn/path-17/module-17-23-option-book-risk) 24. [TPath test, 30 questionsNot yet](/learn/path-17/module-17-23-option-book-risk#pathTestSection) Path 17 in reading time: 215 minutes over 23 modules Minutes of reading per module, this one in amber. Source: RupeeCase Learn, Path 17. Explore next ## Put the module to work. * [Free module 17.3Covered call, protective put and cash secured put8 min read](/learn/path-17/module-17-3-covered-call-and-protective-put) * [Free module 12.7Position sizing and risk of ruin for F&O beginners8 min read](/learn/path-12/module-12-7-position-sizing-and-risk-of-ruin) * [Free module 17.13Hedging a stock portfolio with Nifty puts9 min read](/learn/path-17/module-17-13-hedging-with-nifty-puts) * [Path 17Strategies and hedging23 modules live, 0 coming next](/learn/path-17/) * [ToolOption payoff builderLegs on a dated Nifty chain, breakevens and charges](/learn/tools/payoff-builder) * [PillarDerivatives and QuantFutures, options, Greeks and more, from dated NSE data](/learn/derivatives) Community ## Join my WhatsApp group. Scan the code, fillFill one short form, and join my WhatsApp group. Slides, sources, factsheets and the rebalance logs live there, and members join a daily Google Meet with me. New to RupeeCase? [Getting started](/getting-started) [See the terminal](/terminal) [Sign up for RupeeCase](https://invest.rupeecase.com/signup) [Join the WhatsApp group](https://forms.gle/C6HMtM1Z2GfeocQV7) [One form, one group](https://forms.gle/C6HMtM1Z2GfeocQV7)Scan with your phone camera SSources ## Go to the source. 6 sources, NSE the most cited The publisher of each source listed below. Source: Module 17.4 source list. 1. [SEBI Investor, Understanding derivatives (hedging with derivatives)](https://investor.sebi.gov.in/understanding_derivatives.html) SEBI 2. [NSE, equity derivatives contract specifications (lot size, strikes, cash settlement)](https://www.nseindia.com/static/products-services/equity-derivatives-contract-specifications) NSE 3. [NSE, securities transaction tax on equity derivatives](https://www.nseindia.com/static/products-services/equity-derivatives-securities-transaction-tax) NSE 4. [NSE, India VIX index description](https://www.nseindia.com/static/products-services/indices-indiavix-index) NSE 5. [NISM, Series VIII Equity Derivatives, test objectives (hedging)](https://www.nism.ac.in/revamp-nism/test-objectives-revised-nism-series-viii-equity-derivatives-certification-examination/) NISM 6. [Israelov, R. and Nielsen, L. N., Still Not Cheap: Portfolio Protection in Calm Markets, Journal of Portfolio Management, 2015](https://doi.org/10.3905/jpm.2015.41.4.108) Paper GTerms ## 4 terms from this module. HedgeA position taken to reduce a risk already held. It costs money and removes some loss. PremiumThe price of an option. The buyer of a put pays it and the seller receives it. DeductibleIn a put hedge, the loss the holder carries before the put starts to pay: the points from the future down to the strike. Protective putA bought put held against a holding or a future, which sets a floor under the loss. [All 230 terms in the glossary](/learn/glossary) [Question people askIs buying puts every month worth it for a long term investor?A short answer with a dated chart](/learn/questions/buying-puts-every-month)[Related module17.3 Covered call, protective put and cash secured put8 min, Beginner](/learn/path-17/module-17-3-covered-call-and-protective-put)[Related module12.7 Position sizing and risk of ruin for F&O beginners8 min, Beginner](/learn/path-12/module-12-7-position-sizing-and-risk-of-ruin)[Pillar guideDerivatives and Quant115 modules across paths 12 to 19](/learn/derivatives) Education only, not investment advice, a research report or a recommendation to buy, sell or hold any security. RupeeCase (QC Alpha Technologies Pvt Ltd) is not registered with SEBI as an investment adviser or research analyst. Contracts and prices shown are for illustration only, come from NSE end of day files at least 30 days old, and are not recommendatory. Derivatives trading carries a high risk of loss.