Asymmetric Calendar Back Spread Strategy

Recently market shot up to 9900 and as a trader if one was expecting it come down, one could have bought put options to make a good profit.

Now two questions arise 

1. What put option to buy?
2. How to minimize the risk in case the view goes wrong.

For the first question lets say we conclude through some analysis that market will come down to 9200 levels from where it shot up and we are OK to buy 9500 PE.

Now we are left with the second question how to minimize the risk. There can be various strategies possible

1. Buy naked 9500 PE 7th May 2020 put, Max risk would have been 50 * 75 = 3750
2. Do a bear spread Buy 9500 PE 7th May 2020 put, Sell 9000 PE 7th May 2020 put, Max risk n that case would be been maybe around [50 (9500 PE) -15 (9000 PE)]* 75 = 2625

But i had an observation and seems like using the reverse calendar spread we could have reduced our risk a lot

We could have chosen 

1. Buy 9500 PE 7th May 2020, Sell 9000 PE 14th May 2020. Max risk would have been (50-40) *75 = 750 
2. Buy 9500 PE 7th May 2020, Sell 8500 PE May 2020. Max risk would have been (50-50)* 750 =  0.

In both the cases as the market fell it gave a profit [(Sell- Buy) * Lot Size] of

• 9500 PE 7th May (300-50)  * 75 = 18750. 
• 9000 PE 14th May or 8500 PE May (50-100)*75 = -3750
• Net Profit 18750 - 3750 = 15000

This Gives us a risk reward ratio of 1:20 or even more. On the other hand trading the naked or bear spread strategies would have given us a risk reward ratio of 1:5 only.

This strategy could be explored for doing weekly options trading to get FD like income also. Need to explore this further.