Investor Choices

Market Looks Like Volatile ? Manage your risk with proper strategies. Want to trade in the volatile market with proper risk management? When we talk about risk management then suddenly it clicks with options strategies. And out of so many strategies available for options trading we will discuss here two popular strategies for options trading i.e Straddle and strangle let us understand how these strategies work in a practical way.  Assumed, CMP of  Index 2,700 for both the cases. 1) Straddle : To form the straddle strategy we need to buy a call and buy a put with the strike price near to CMP. Here trader expects that there is some big news or an event but not sure which side the market will move hence he prefers this strategy. Eg: Annual Budget, Financial policy reforms, Government election results, Government policy reforms etc.  Formation: Strike Price 2,600 Buy Call @137.6 Buy Put @ 46.85 With the same strike price which is nearby CMP. See how your pay off w...

Hedge the portfolio with the help of 'Derivatives' (Futures). I have invested in the Stock Market but I am afraid that my portfolio might fall drastically and it has high probability.... How can I protect myself  from uncertain high probability loss ??? Here Comes into a picture the word 'Hedging'. Now the question arises how can i hedge my portfolio and the answer is 'Derivatives'. Yes my friend it is only possible with the help of derivatives. There are four types of derivatives Forward, Futures, Options and swaps. We will only discuss here about the Futures. Now understand the concept of perfect hedging with the help of FUTURES.  Let's take an Example- You have a diversified equity investment 200 cr and available balance in bank 20 cr. Beta of the portfolio - 2.2 (calculated as per specified approach) Nifty CMP: 11010  NIFTY futures 11500 expected fall maximum 10% from here. Now how many futures need to be sold for perfect hedging? 1 Index futur...