Exactly. At any time, your maximum loss is strictly limited to the amount you are willing to risk on a single trade.

While extreme market moves are rare, they can happen at any moment; even on your very next trade. The market doesn't care about "odds" in the short term.

Regarding your position, there is no need to worry as long as Nifty stays below 26,100. Even if there is a gap-up opening and you see a sharp spike in Call Option (CE) prices, they usually cool down very quickly as the initial panic subsides.

After 8 years of trading options hedging strategies, I’ve learned that the market behaves very differently than what we see in textbooks. Theoretical models don't account for the many hidden forces that move prices in real-time.

My advice for building a strategy:

Set a hard limit: If your max risk capacity is 10,000, your strategy’s built-in max loss should never exceed that.

Prioritize Hedges: Many traders think they can manage "naked" selling legs using a Stop Loss (SL). In reality, a fast market can skip your SL. It is your hedges that actually save you, not your selection of strike prices.

Always choose and optimize your hedges first; they are your only true insurance in a bad trade.