STBT (Sell Today Buy Tomorrow)
The bearish counterpart to BTST — sell a futures or options position today and cover it the following session, aiming to profit from an anticipated overnight decline.
Definition
STBT (Sell Today Buy Tomorrow) is the mirror image of BTST: the trader initiates a short position — typically in stock futures, index futures, or options — near or after the close of one trading session and squares it off the next morning to capture an anticipated fall in price. Unlike BTST in the cash equity segment, STBT cannot be executed as an overnight short in cash equities by retail traders under SEBI rules; the natural venue is the stock futures or index futures segment, where short positions can be freely carried overnight with the appropriate SPAN margin. Options traders may implement an equivalent bearish overnight bet by buying put options or selling call options across sessions.
Why it matters
Many of the same overnight catalysts that drive BTST — earnings misses, global risk-off cues, macro data surprises, geopolitical events — can drive sharp gaps lower. STBT gives bearish traders a disciplined, time-bounded structure for exploiting those gaps. Because the position is held for only one night, the speculative risk window is narrow, reducing the impact of multi-day adverse drift. In Indian markets, global cues from US markets (which close after Indian market hours) and Asian opening gaps frequently create STBT opportunities in index futures the following morning. However, the overnight short carries theoretically unlimited loss potential if the underlying gaps up sharply, which makes position sizing and a clear stop-loss plan essential. Futures-based STBT also requires sufficient SPAN margin to be maintained through the overnight session.
How it works
A trader expecting a negative overnight development sells a futures contract (e.g., Nifty futures or a stock futures contract) in the afternoon session, typically after confirming a technical or fundamental bearish trigger. The short position is carried overnight at the prevailing mark-to-market price. The following morning — usually in the first hour of trade — the trader buys back the futures contract to close the position. Profit equals the difference between the sell price and the next-day buy price, minus brokerage and statutory charges such as STT. If the market gaps against the trade, the loss is crystallised immediately at market open, so many STBT traders use pre-set stop-loss orders placed before leaving the terminal.
Example
Suppose Nifty is at 24,200 on a Thursday afternoon and you expect weak US jobs data overnight to drag Asian markets lower. You short one lot of Nifty futures (50 units) at 24,200. Friday morning, Asian markets open 1% lower and Nifty gaps down to 24,000 at open. You buy back the futures at 24,000, booking a gross profit of 200 points × 50 = ₹10,000. Your overnight margin requirement was approximately ₹1.2 lakh. Had Nifty instead gapped up to 24,400 on positive global news, your loss would have been 200 × 50 = ₹10,000, underscoring the importance of having a maximum overnight loss threshold defined before entering the trade.
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