Eager to kick-start your Trading Career? Be a part of India's First Multi-Asset Trading Mentorship Program by Elearnmarkets with Vivek Bajaj & four other mentors. To know more, fill the form at - elearnmarkets.viewpage.co/UA-cam-TMP or call our team at +91 89024 75221
Mere hisab se vivek sir ne hi sabse pehle you tube par REAL Trader introvise kiya hum aam admi ke liye iske pehle hum kisi trader ko jante hi nahi the so THANK YOU VIVEK SIR keep it up
I am a learner and yet to get the experience in implementation and other finer details. But i want to say a big thank you to Vivek ji and Govind ji for taking the time to educate and providing such wonderful strategies... that too mind you is free of cost.. these strategies give so much hope .. thank you again..both are such gentlemen
Sir apke podcast bahut helpfull hote hai . Aap market ke champions ko hamare samane le kar aate hai jisse hum jese chhote traders ka bahut fayda hota hai. Sir i request ki aap shri Ravi r kumar sir ka interview karein. unka style of trading bilkul unique , simple and accurate hai. Hum to unka ek youtube session le kar he fan ho gye and unke session sikh kar trade liya or successful raha. Please unko invite karein. Yaha bahut se viewers ko unki techniques se bahut fayda hoga. Thank you ❤❤❤❤❤❤
@@shantanurathor37Bhai scalable nahi hai. Mere pass 5 crore rs ho toh me sare k juniorbees leke nahi beth sakta. Yaad rakhna juniorbees mein adani sahab hai
Great video sir ❤❤ Sir Learn to trade ka student hu apka Ek bat btani thi apko Apki series ko ek bar dekh kr sharukh khan bnne ki kosish ki or 10 jagh Logo ki videos dekh kr Maine 50 k se learning shuru ki thi Or 10k ka nuksan khaya ek mhine m yani 20% loss , Bad m Ab Learn to trade phir 5 bar dekhi Jo jo gltia ki mehsoos hua ki apne Apni har video m jo position szing risk management per trade smzaya vo ni smza lekin dhake khane ke bad loss khane ke bad akal ayi ki ye to sir ne smzaya tha kash mze ke lie na video dekh kr sikh ke bar bar bar practice krta to nuksan na khata ab 2 mhine se vhi 50k h jo ab profit m he end of the day close hote h thank u for the learn to trade sir ❤❤ Ab,dream,h ki apse milna h but 1 cr profit krke
@@finideas Kindly clear my doubt If we buy a future (from margin got from putting NIFTYBEES as collateral) and buy a put if the market goes down by 10% then put will just limit the loss of future but will never give extra money to buy NIFYBEES and we will lose the value of NIFTYBEES by 10%
Initial capital : Rs 6,00,000(6 lac) 30 % ETF : Rs 1,80,000 70% bond : Rs 4,20,000 put 180000 from ETF as collateral you get margin Rs 1,44,000 In Rs 1,44,000 buy 1 lot NIFTY FUT (cost will be around 65k) and 1 lot PUT option (cost will be around 15k)
When taking the exposure of only 1 lot, we recommend not buying ETFs as it will be an unhedged position. Instead, you can park 90% of the amount in debt instruments and purchase 1 lot of Nifty Futures by pledging the debt. Use the remaining 10% of the amount to manage hedging and forwarding costs.
- Future Premium or forwarding cost -7% per annum and Insurance (PE) cost -3% per annum so this strategy cost around -10%. - Lets assume that we get 5% FD interest (post tax) on 90% capital so our cost to run this strategy is -5% per annum. - This strategy will return only 7% equivalent to FD return if Nifty returns 12% per annum. - I will buy the market on crash. In back testing for 10 years, this strategy reduces the return by 4% after doing all the hard work. - Also, you may miss 13% dividend in 10 years which gives around 15% less return than buy and hold. - This strategy has only one advantage that it makes your holding less volatile. Please do share if I calculated it wrongly but I am keen to deploy this if this works.
back test for 15 or 20 years , buy nifty bees & pay only for put premium 12 month expiry , so buy 11.50 lac nifty bees and buy 23,000 pe 2x = 30,000 rs , for hedge 11.50 lac portfolio ,
41:07 bro how come the cagr from 2014 is 18% I calculated the return from the sheet you have shared from 2014-2023 the cagr is 11.8%, Just clarify or don't mislead the crowd. Vivek ji please check whatever the person coming for F2F is saying, just cross check with the help of your team and seek clarification.
Vivekji y video dekha bahut achha tha journaly apk sare video dekhakar hi mene market sikha he Lekin sir Jo hedge kar rahe he wo to bahut normal he Ap monthly future kharid kar monthly itm put kharid lijiy aur every month rollover kariye isme hi Kam ho jaega Thanks 🙏
You raised a good point. Let's explain it. There are a few reasons to choose long-term synthetic futures and put options over monthly expiries. First, monthly put options are comparatively costlier than annual put options. Monthly options have a cost of 2-3%, while annual options cost around 4-5%. Second, you can roll over the annual position to the next year before the last month, avoiding the sharp decline in time value during the final month. Third, using long-term options provides peace of mind by eliminating the headache of monthly rollovers. Lastly, choosing synthetic futures helps avoid daily cash settlements for mark-to-market (MTM) adjustments.
Like many in the comments, I found this very interesting, especially if I do it myself as suggested by Govind. So I did some back-testing, from 1/1/2010 until 19/7/2024, using 3 scenarios i.e. buying either monthly puts, half-yearly puts or annual puts. For half-yearly and annual puts, I assumed the cost is 2.5% and 5% respectively, like mentioned by Govind. In both scenarios, I end up making less money than just buying NIFTYBEES on 04/Jan/2010 and holding it until today. Half-yearly return for 15% less and yearly return was 35% less. In case of monthly balancing, we can get at par returns only if cost of put is on average 1.4% at the beginning of the month. Anything above that, there is loss and vice versa. Maybe this strategy works when using options to mimic nifty but in itself, the hedging strategy for NIFTYBEES doesn't work.
Hi I was trying to test this as well and found it's less profitable. May be the way he executes makes the difference .that is why the advisary services. Can you please share your test result so that we can compare?
Interview was very interesting. Govind is sounding confident but i guess there are better ways to hedge ur portfolio. The thing which was told, is very basic and used to popular 10 yra back. Enjoyed the conversation😊
Thanks Vivek ji for this broadcast. Privious video atleast 10 times dekha very interesting.til so many questions but very jabardast Please mention which brocker provide long term option to buy
Great! Thank you! A follow up question, Govindbhai’s method is that we use 70% of the capital to get an interest rate to fund the protective puts and 30% toward ETF/futures purchase. But over the years when the ETF size goes up , we will need more protective puts. But the 70% fund will remain the same and the interest rate we get from it will not change with time, correct? How is it sustainable in the long run?
You have raised a good question. The answer is that whenever the ETF grows, futures will also generate cash profits. This, in turn, will automatically enhance the debt portion.
@@JAG0PAG Lets say you invest Rs. 1 crore as follows. Now the product can be seen as follows as well: 1. 30 lacs in equity + 30 lacs protection 2. 70 lacs in Futures + 70 lacs protection + 70 lacs in Debt Now lets say market moves from 10000 to 20000 , your exposure will be 2 crores & your hedging cost will be 20 lacs. Of this Rs. 5 lacs will be funded from interest generated in debt. Now question is how do you fund Rs. 15 lacs. Ans. When market will reach 20000, your profit will be 1 crore of which 30 lacs profit will be added in equity (non -cash) and 70 lacs will be profit from futures (cash). This 70 lacs fund will be sufficient enough to fund your additional requirement of hedging cost and the remaining funds can be parked in debt.
@@JAG0PAG Lets say you invest Rs. 1 crore as follows. Now the product can be seen as follows as well: 1. 30 lacs in equity + 30 lacs protection 2. 70 lacs in Futures + 70 lacs protection + 70 lacs in Debt Now lets say market moves from 10000 to 20000 , your exposure will be 2 crores & your hedging cost will be 20 lacs. Of this Rs. 5 lacs will be funded from interest generated in debt. Now question is how do you fund Rs. 15 lacs. Ans. When market will reach 20000, your profit will be 1 crore of which 30 lacs profit will be added in equity (non -cash) and 70 lacs will be profit from futures (cash). This 70 lacs fund will be sufficient enough to fund your additional requirement of hedging cost and the remaining funds can be parked in debt.
So many comments that call can be bought, actually this is useful for investors who have minimum 1 lot etf as investment. This can be used as collateral to trade options , just another 12 percent to what you are making on options
Very nice. Congratulations to both of you. I have one question You are saying that when market goes down that time you book profit in put and increase your investment by using this money. But the next put we have to buy for hedging will also be costlier and our cost of hedging will increase. So the gain in put is not actually gain. That will need more money. Second point , please mention which month series future shall be bought for this strategy. Thank you so much. Near far etc.
Dear @ravindraprakashhans ji 1. When market goes down say from 22000 to 10000 then your 22000 put will be worth 12000 and your 10000 put will be trading at around 500-700 depending on what time of year this happens. So you will have sufficient inflow to add equity at lower levels 2. As soon as you introduce synthetic future in investment, you see a lot many futures at various strikes & expiries. Depending on the which synthetic future is running at most logical cost, the synthetic future strike & expiry is purchased. It may vary from quarterly synthetic to December synthetic
Mey options mey trade nehi karta aur age karna bhi nehi hai ..😅 It seems kind of complications...aaj ka video dekar aur bhi dar lag geya.. sir mey toh audience ko bolunga stockedge❤❤ ka premium lelo breath dekho invest karo..mast raho
In relax plan, the Future buy will give MTM losses during down-move and the insurance PUT will give same amount as gain, making it net zero. So the Units will not grow from the future part (70%). The units can grow only from the (30%) ETF part, as the losses are not booked in ETF, and the gains from PUT can be used to buy new ETF units. In case of Future (70%) part, the MTM losses will be equal to the PUT gain - so net zero. We just end-up paying more insurance as cost. Am i missing something?🤔
Dear Thanika, Lets understand this with an example. Say you started with 1 crore investment as follows: a. 30 lacs in Equity + 30 lacs protection in put b. 70 lacs from future + 70 lacs protection from Put + 70 lacs parked in Debt Market was at say 20000 and moved to 10000 a. Equity + Put -> In this part, working is simple -> the Puts will generate 15 lacs in free cash which can be deployed to purchase Equity b. Future+Put+Debt -> Here your understanding is correct that Put will just offset the loss on future so practically no outflow in Future. Now, your "b" part will look like 0 + 70 Lacs in debt = 70 Lacs NLV -> This much exposure will again be taken in Future + Put BUT NOW The entry level of future will be 10000. So now if market moves back to 20000, your NLV goes to 1.4 cr (70Lacs on Debt + 70 lacs on future - cost of protection) Not losing money on future when market goes down, is inherently a lot of profit for us when market recovers. Hope your query is resolved. If you need more clarification, kindly visit bit.ly/iltsmgt-i
Extremely helpful f2f . Only 1 question that was asked by vivek sir that instead of index investment if someone wants to hedge stock portfolio then? In my case the portfolio beta is 0.8 then considering nifty beta as 1 ., how should I hedge by buying put option? I understand that my portfolio is less risky compared to nifty.... Please guide....
It is difficult to answer this question without actually knowing your portfolio because beta in itself has fallacies in itself. When we say beta, we mean that if the market goes up it will rise at a speed of 80% of index and if the market goes down it will fall at a speed of 80% of index fall. If this is the case then generally it is a better idea to shift to Index itself as that way loose hedge errors can be easily avoided. Loose hedge errors are events wherein hedging has been done by just matching beta and it has resulted in unhedged-like scenarios. For example you might find Reliance being correlated with index at say 1.2 now if you buy 1.2 times the quantity of Nifty puts then there may be cases when Reliance went up while index went down and you made money on both trades. The only problem is when Reliance dropped & market went up, the whole purpose of hedging goes for a toss.
1st you said kali call lene me maja nahi hai. then you said we can make synthetic future by buying call and selling put. then you said buy put for protection.🙄 I am not expert in derivative. but if I sell put and then buy put for protection, isn't is like there is no put. only call buy from synthetic future left. so finally, we are just buying call! Please some one clarify
Thank you for the comment. You raised a good question. As we explained in the video at 52:45, the strike price for the synthetic futures will be different as it also includes the forwarding cost. On the other hand, we want hedging from the current level, so we will purchase ATM put options at the current level. Overall, the strike prices for the synthetic futures and the hedging puts will be different.
Ans. There are 3 reasons for that Tax prudence - Investing in equity & keep shifting the profits to ETF will tend to have lower tax than what you are suggesting When the market goes up - You would want to lock your profits by shifting to higher strikes. ITM call will be difficult to trade as against an OTM Put (as in the case of of this strategy) No opportunity to reduce cost by using Synthetic future - You can buy a September synthetic and December put, if September Synthetic is cheaper. Similarly, you can buy different strike synthetic if that is cheaper. So if you are using only call, you are leaving money on table to reduce the cost
Well even if I agree to his point then tell me how do I know at what point do I square off my Puts and put the money into ETF? How do i know that market has hit the bottom?
Govind sir very good video and thank you Vivek sir one query if mkt is trading on 24500 now in nifty and we have synthetic future of 24500 and buy put of 24500 for hedging,.. now suppose mkt crashes to 23500, so at that time to excercise insurance 😊, do I need to flip only put of 24500 and buy new put of 23500 , or I should flip both synthetic fut and put both and buy new position at 23500 for both synthetic fut and put at strike price of 23500?
Can be taken. The only disadvantage is you are leaving interest arbitrage on table which reduces cost by 1.5-2% which can be very handy when market is in a range and in absolute terms will have huge difference in long term
Synthetic future is equivalent to 35:15 future and future is equivalent to deep ITM call buy option then we can buy simply deep ITM instead synthetic future please correct me if am wrong
Correct. Govindji is assuming that we will exit at the exact bottom. Also Markets dont fall in a straight line. There are strong intraday pullbacks which can make one exit
Sir thanks for details explanation and video. One query, when to move to next month on synthetic future , lets say we bought synthetic future on 3rd May (for 30th May nifty strike price 22500 call buy and put sell) and we bought 22700 put also for hedging, then on 29th may we should roll over on 29th May or on 20th May or when? to next month June.
Good question. This will provide more clarification for others as well. The answer is as follows: As we explained in the video, we will purchase the December month synthetic futures and hedging. Generally, next year's options also gain liquidity around November. Hence, we roll over the position in November. The second advantage is that we don't have to pay for the sharp decline in the options' time value during the last month.
Theoretically it is shown that it works best but I have few questions: 1. When market goes down it shows that there is no loss but actually 30% tax loss was not considered on the income from hedged put 2. How to encash hedged PUT to increase the investment quantity with below limitation: a. If PUT becomes deep ITM due to crash like 2020, it will be highly illiquid to encash b. If you can not encash then you don't get the gain of buying PUT c. During bear market when you encash PUT then next hedge cost will be much more due to high VIX 3. We can not time the market so have to keep rolling over the PUT if market keeps going down, this can increase PUT cost due to increasing VIX at every roll over or pullback before correction so this can drastically increase the hedge cost
add on 30% taxes which ever you got profit from put side...he is just fooling people nothing else..i think covered call is much better option than this..
Well, one is going to lose in PE option some years, and gain some other years, if you have had a loss first you can carry that over to be adjusted against any F&O gains for next 8 years, so a good part of the PE gains will be balanced out with losses you will incur on PEs.
@@Meditrader Not really. If the total profit earned on Put in say 10 years is same as total cost paid (Loss) on put then, technically, there is no profit or no loss from Put in 10 years. which is not the case here. so this is not correct answer. Correct answer may be that he is declaring long term puts as hedging hence treated as long term investment hence may be declared as 10% capital gain instead of 30% tax. That is the only option I can think of.,.
You have raised some good points here. This will help people gain more clarity about the strategy. Let's explain them one by one: 1. When the market falls, puts will generate profits on the full 100% exposure, but this will be offset by the loss from 70% of the futures. Additionally, the premium paid for puts and the future forwarding cost will also be deducted, making it tax-friendly.
2. We generally shift the strikes before the put options become illiquid. However, if the put options do become illiquid, we can square them off with synthetic put options.
3. We should shift the puts, but we need to consider the cost-benefit of the shift. Regardless, at maturity, the puts will automatically be shifted.
Eager to kick-start your Trading Career? Be a part of India's First Multi-Asset Trading Mentorship Program by Elearnmarkets with Vivek Bajaj & four other mentors. To know more, fill the form at - elearnmarkets.viewpage.co/UA-cam-TMP or call our team at +91 89024 75221
Tnx sir
Long term option men kaise paise banayen jaldi se banaye video sir...kuch Sikh paun mai....aur fouj k noukri hoti nhi mujhse
Thank you, @Elearnmarkets, for giving Finideas the opportunity to share our vision on long-term wealth creation.
Thank you sir what about income tax on profit made by put
So slab will require changes
After income tax only final amount of nifty bees add hongi
👏👏👏👏 Congratulations 👏👏👏
Mere hisab se vivek sir ne hi sabse pehle you tube par REAL Trader introvise kiya hum aam admi ke liye iske pehle hum kisi trader ko jante hi nahi the so THANK YOU VIVEK SIR keep it up
Thank you for the kind words!
Wow! Wow! Wow!!! The more I learn, the less I know, that how much I know. Wow!! Too good.
I am a learner and yet to get the experience in implementation and other finer details. But i want to say a big thank you to Vivek ji and Govind ji for taking the time to educate and providing such wonderful strategies... that too mind you is free of cost.. these strategies give so much hope .. thank you again..both are such gentlemen
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I am an ETF investing person, after watching this video I got an idea to hedge
One of the best episode. Great Learning..
Thanx a lot vivek ji . U are doing a great work. Helping to retailer..
Thanks and welcome!
Vivek sir you are my first mentor in market. Thank you so much.
Thank You So Much
Superb video with multi-asset management with Future with Hedging strategy.....Love you both for your mentorship, Vivek Bajaj & Govind Jhawar
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bahut badiya.....bahut badiya.....bahut badiya......
Wow, Opened a new Dimension within inside me.
& After listening that he's been doing it since 2014...makes me feel how less ik about the market. 🙏🇮🇳🙏
बहुत बार ऐसा होता है जब लगता है कि भैया मेरा दिमाग तो एकदम जीरो लेवल का है। सेल्यूट ऐसा वीडियो बनाने के लिए।
Thank you for your valueable comment.
Excellent session..Thank you both of you.
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Nice video. Those who did not understand please watch the video again. He has answered all the questions including when to cover put
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❤ 🙏🏼 thanks Siri for the valuable information.
EXCELLENT VIDEO. THIS IS THE BEST AND DETAILED VIDEO I HAVE EVER SEEN.
Thank you for your valuable comments.
It's quite amazing video. Investment with peace of mind and return in long term much better than daily frustration by using option trading.
Thank you for your valuable comments.
👏👏👏👏 Congratulations 👏👏👏
Sir apke podcast bahut helpfull hote hai . Aap market ke champions ko hamare samane le kar aate hai jisse hum jese chhote traders ka bahut fayda hota hai. Sir i request ki aap shri Ravi r kumar sir ka interview karein. unka style of trading bilkul unique , simple and accurate hai. Hum to unka ek youtube session le kar he fan ho gye and unke session sikh kar trade liya or successful raha. Please unko invite karein. Yaha bahut se viewers ko unki techniques se bahut fayda hoga. Thank you ❤❤❤❤❤❤
EXCELLENT VIDEO. THIS IS THE BEST AND DETAILED VIDEO I HAVE EVER SEEN. THANKS A TON VIVEK JI !
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Much love and respect for good work, thankyou
Much appreciated!
Lovely discussion. Very insightful
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Making 18 % from long with hedge..
Is nirvana ....sir best of business makes 10% only ..
Best दहंदो !!! ❤
Thank you for your valuable comments.
Bhai 19% CAGR se juniorbees ETF grow Kiya h check it😂
@@shantanurathor37Bhai scalable nahi hai. Mere pass 5 crore rs ho toh me sare k juniorbees leke nahi beth sakta. Yaad rakhna juniorbees mein adani sahab hai
Great video sir ❤❤
Sir Learn to trade ka student hu apka Ek bat btani thi apko Apki series ko ek bar dekh kr sharukh khan bnne ki kosish ki or 10 jagh Logo ki videos dekh kr Maine 50 k se learning shuru ki thi Or 10k ka nuksan khaya ek mhine m yani 20% loss , Bad m Ab Learn to trade phir 5 bar dekhi Jo jo gltia ki mehsoos hua ki apne Apni har video m jo position szing risk management per trade smzaya vo ni smza lekin dhake khane ke bad loss khane ke bad akal ayi ki ye to sir ne smzaya tha kash mze ke lie na video dekh kr sikh ke bar bar bar practice krta to nuksan na khata ab 2 mhine se vhi 50k h jo ab profit m he end of the day close hote h thank u for the learn to trade sir ❤❤
Ab,dream,h ki apse milna h but 1 cr profit krke
Thank you sir. Keep going on Face 2 Face ❤
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Learnt something which is actually implementable in real life ! 👍👍
Super and fantastic video! Very insightful.
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Wonderful video ❤❤❤ govind sir ❤️
Thank you for your valuable comments.
@vivekbajaj sir ap great h kitna apna time dete h🙏🏻 real hero h sir
Very good insights, great learning, thank you.
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Govind Jhawar ji has in depth knowledge about his domain! Awesome f2f vivek ji. Thank you!
Thank you for your valuable comments.
One of the best videos I have ever seen ❤
@@ashutoshvedak3575 Glad to know that you like this concept.
@@finideas Kindly clear my doubt If we buy a future (from margin got from putting NIFTYBEES as collateral) and buy a put if the market goes down by 10% then put will just limit the loss of future but will never give extra money to buy NIFYBEES and we will lose the value of NIFTYBEES by 10%
Goving sir youare too good man !
govind sir is the best!!!
Thanks for your help valuable time knowledge for us again pranam 🙏🙏🙏
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Waah !! Vivek Bhai & Govind Babu....Absolutely Absolutely Marvelous Content
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Thank you for your valuable comments.
Too meaningful
too much knowledge to learn... is bhai saab ke sath to puri series banani chahiye...
Congratulations Bajaj sahab for 1M
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Initial capital : Rs 6,00,000(6 lac)
30 % ETF : Rs 1,80,000
70% bond : Rs 4,20,000
put 180000 from ETF as collateral you get margin Rs 1,44,000
In Rs 1,44,000 buy 1 lot NIFTY FUT (cost will be around 65k)
and 1 lot PUT option (cost will be around 15k)
When taking the exposure of only 1 lot, we recommend not buying ETFs as it will be an unhedged position. Instead, you can park 90% of the amount in debt instruments and purchase 1 lot of Nifty Futures by pledging the debt. Use the remaining 10% of the amount to manage hedging and forwarding costs.
Congratulations for 1 million subscribers
- Future Premium or forwarding cost -7% per annum and Insurance (PE) cost -3% per annum so this strategy cost around -10%.
- Lets assume that we get 5% FD interest (post tax) on 90% capital so our cost to run this strategy is -5% per annum.
- This strategy will return only 7% equivalent to FD return if Nifty returns 12% per annum.
- I will buy the market on crash. In back testing for 10 years, this strategy reduces the return by 4% after doing all the hard work.
- Also, you may miss 13% dividend in 10 years which gives around 15% less return than buy and hold.
- This strategy has only one advantage that it makes your holding less volatile.
Please do share if I calculated it wrongly but I am keen to deploy this if this works.
back test for 15 or 20 years , buy nifty bees & pay only for put premium 12 month expiry , so buy 11.50 lac nifty bees and buy 23,000 pe 2x = 30,000 rs , for hedge 11.50 lac portfolio ,
this gives you advantage of leverage.2x limit is for AIF. individual can get upto10x
Very good knowledge sir ❤❤ thanks for this
One of the best videos of the series.
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sir govind jhawar sir subject intricacy is phenomenal
super video. I am still thinking how couldn't i noticed this till now. this video cost in lakhs.
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Beautiful strategy. Thank you so much for sharing. Protection part is eye opener.
My pleasure!
bahut Achcha explain kar rahe ho aap THANS
Valuable better content. Better efforts 🎉🎉
great mentor you both
very nice. thanks ..
thanks , informative
nice session.... high vix...calendar spread
I m doing this from last 2 yr...
Thank you sir. We are glad to have clients like you.
Result kya hua
Return kitna bana hai
41:07 bro how come the cagr from 2014 is 18% I calculated the return from the sheet you have shared from 2014-2023 the cagr is 11.8%, Just clarify or don't mislead the crowd.
Vivek ji please check whatever the person coming for F2F is saying, just cross check with the help of your team and seek clarification.
The annimation are too cool. Give a high five to the graphics guy in your team!
very nice thanks
Vivekji y video dekha bahut achha tha journaly apk sare video dekhakar hi mene market sikha he
Lekin sir Jo hedge kar rahe he wo to bahut normal he
Ap monthly future kharid kar monthly itm put kharid lijiy aur every month rollover kariye isme hi Kam ho jaega
Thanks 🙏
You raised a good point. Let's explain it. There are a few reasons to choose long-term synthetic futures and put options over monthly expiries. First, monthly put options are comparatively costlier than annual put options. Monthly options have a cost of 2-3%, while annual options cost around 4-5%. Second, you can roll over the annual position to the next year before the last month, avoiding the sharp decline in time value during the final month. Third, using long-term options provides peace of mind by eliminating the headache of monthly rollovers. Lastly, choosing synthetic futures helps avoid daily cash settlements for mark-to-market (MTM) adjustments.
Thanks to both maha guru 🙏🙏
Thank you for your valuable comments.
Like many in the comments, I found this very interesting, especially if I do it myself as suggested by Govind.
So I did some back-testing, from 1/1/2010 until 19/7/2024, using 3 scenarios i.e. buying either monthly puts, half-yearly puts or annual puts.
For half-yearly and annual puts, I assumed the cost is 2.5% and 5% respectively, like mentioned by Govind. In both scenarios, I end up making less money than just buying NIFTYBEES on 04/Jan/2010 and holding it until today. Half-yearly return for 15% less and yearly return was 35% less.
In case of monthly balancing, we can get at par returns only if cost of put is on average 1.4% at the beginning of the month. Anything above that, there is loss and vice versa.
Maybe this strategy works when using options to mimic nifty but in itself, the hedging strategy for NIFTYBEES doesn't work.
Hi I was trying to test this as well and found it's less profitable. May be the way he executes makes the difference .that is why the advisary services. Can you please share your test result so that we can compare?
How about in a scenario where the market is in a downturn for 12-24 months or just moving sideways, no real significant upward movement?
Interview was very interesting. Govind is sounding confident but i guess there are better ways to hedge ur portfolio. The thing which was told, is very basic and used to popular 10 yra back. Enjoyed the conversation😊
Thanks Vivek ji for this broadcast.
Privious video atleast 10 times dekha very interesting.til so many questions but very jabardast
Please mention which brocker provide long term option to buy
Keep watching
Very informative 🎉🎉🎉🎉
Can we do. in midcap index ?
Great! Thank you! A follow up question, Govindbhai’s method is that we use 70% of the capital to get an interest rate to fund the protective puts and 30% toward ETF/futures purchase. But over the years when the ETF size goes up , we will need more protective puts. But the 70% fund will remain the same and the interest rate we get from it will not change with time, correct? How is it sustainable in the long run?
You have raised a good question. The answer is that whenever the ETF grows, futures will also generate cash profits. This, in turn, will automatically enhance the debt portion.
@@finideasGovindbhai, could you illustrate that with a simple example?
@@JAG0PAG Lets say you invest Rs. 1 crore as follows. Now the product can be seen as follows as well:
1. 30 lacs in equity + 30 lacs protection
2. 70 lacs in Futures + 70 lacs protection + 70 lacs in Debt
Now lets say market moves from 10000 to 20000 , your exposure will be 2 crores & your hedging cost will be 20 lacs. Of this Rs. 5 lacs will be funded from interest generated in debt. Now question is how do you fund Rs. 15 lacs.
Ans. When market will reach 20000, your profit will be 1 crore of which 30 lacs profit will be added in equity (non -cash) and 70 lacs will be profit from futures (cash). This 70 lacs fund will be sufficient enough to fund your additional requirement of hedging cost and the remaining funds can be parked in debt.
@@JAG0PAG Lets say you invest Rs. 1 crore as follows. Now the product can be seen as follows as well:
1. 30 lacs in equity + 30 lacs protection
2. 70 lacs in Futures + 70 lacs protection + 70 lacs in Debt
Now lets say market moves from 10000 to 20000 , your exposure will be 2 crores & your hedging cost will be 20 lacs. Of this Rs. 5 lacs will be funded from interest generated in debt. Now question is how do you fund Rs. 15 lacs.
Ans. When market will reach 20000, your profit will be 1 crore of which 30 lacs profit will be added in equity (non -cash) and 70 lacs will be profit from futures (cash). This 70 lacs fund will be sufficient enough to fund your additional requirement of hedging cost and the remaining funds can be parked in debt.
maza aa gya .. pahle wala bhi dekha tha ,, actually i am also in real state mkt , so this strategy looks very facinating ... thx ...
Thank you for your valuable comments.
congratulations Sir
What is free float 7:50
Great video
Sir Ji, bahut hi acha content hai. Awesome
Thank you for your valuable comments.
So many comments that call can be bought, actually this is useful for investors who have minimum 1 lot etf as investment. This can be used as collateral to trade options , just another 12 percent to what you are making on options
Very nice. Congratulations to both of you. I have one question
You are saying that when market goes down that time you book profit in put and increase your investment by using this money. But the next put we have to buy for hedging will also be costlier and our cost of hedging will increase. So the gain in put is not actually gain. That will need more money.
Second point , please mention which month series future shall be bought for this strategy.
Thank you so much. Near far etc.
you will be buying ATM Next month expiry put . Then the price should be lower than your profit booked ITM put of current month expiry.
Dear @ravindraprakashhans ji
1. When market goes down say from 22000 to 10000 then your 22000 put will be worth 12000 and your 10000 put will be trading at around 500-700 depending on what time of year this happens. So you will have sufficient inflow to add equity at lower levels
2. As soon as you introduce synthetic future in investment, you see a lot many futures at various strikes & expiries. Depending on the which synthetic future is running at most logical cost, the synthetic future strike & expiry is purchased. It may vary from quarterly synthetic to December synthetic
Mey options mey trade nehi karta aur age karna bhi nehi hai ..😅
It seems kind of complications...aaj ka video dekar aur bhi dar lag geya.. sir mey toh audience ko bolunga stockedge❤❤ ka premium lelo breath dekho invest karo..mast raho
Great
When to book profit in put?
In relax plan, the Future buy will give MTM losses during down-move and the insurance PUT will give same amount as gain, making it net zero. So the Units will not grow from the future part (70%). The units can grow only from the (30%) ETF part, as the losses are not booked in ETF, and the gains from PUT can be used to buy new ETF units. In case of Future (70%) part, the MTM losses will be equal to the PUT gain - so net zero. We just end-up paying more insurance as cost. Am i missing something?🤔
Dear Thanika,
Lets understand this with an example. Say you started with 1 crore investment as follows:
a. 30 lacs in Equity + 30 lacs protection in put
b. 70 lacs from future + 70 lacs protection from Put + 70 lacs parked in Debt
Market was at say 20000 and moved to 10000
a. Equity + Put -> In this part, working is simple -> the Puts will generate 15 lacs in free cash which can be deployed to purchase Equity
b. Future+Put+Debt -> Here your understanding is correct that Put will just offset the loss on future so practically no outflow in Future. Now, your "b" part will look like 0 + 70 Lacs in debt = 70 Lacs NLV -> This much exposure will again be taken in Future + Put
BUT NOW
The entry level of future will be 10000. So now if market moves back to 20000, your NLV goes to 1.4 cr (70Lacs on Debt + 70 lacs on future - cost of protection)
Not losing money on future when market goes down, is inherently a lot of profit for us when market recovers.
Hope your query is resolved. If you need more clarification, kindly visit bit.ly/iltsmgt-i
number of put is 100 and number of future is 70. that 30 extra put profit will be used to buy etf.
Then it is better to do only 30...
Not 100
@@sbsujeet in that case it will not cover future loss.
@@krishagartala09 Should not do any future, only etf with hedge
Extremely helpful f2f . Only 1 question that was asked by vivek sir that instead of index investment if someone wants to hedge stock portfolio then? In my case the portfolio beta is 0.8 then considering nifty beta as 1 ., how should I hedge by buying put option? I understand that my portfolio is less risky compared to nifty.... Please guide....
It is difficult to answer this question without actually knowing your portfolio because beta in itself has fallacies in itself.
When we say beta, we mean that if the market goes up it will rise at a speed of 80% of index and if the market goes down it will fall at a speed of 80% of index fall. If this is the case then generally it is a better idea to shift to Index itself as that way loose hedge errors can be easily avoided.
Loose hedge errors are events wherein hedging has been done by just matching beta and it has resulted in unhedged-like scenarios. For example you might find Reliance being correlated with index at say 1.2 now if you buy 1.2 times the quantity of Nifty puts then there may be cases when Reliance went up while index went down and you made money on both trades. The only problem is when Reliance dropped & market went up, the whole purpose of hedging goes for a toss.
@@finideas thanks.. That sounds practical.. Will certainly have brainstorming in this matter and find suitable option..
1st you said kali call lene me maja nahi hai. then you said we can make synthetic future by buying call and selling put. then you said buy put for protection.🙄 I am not expert in derivative. but if I sell put and then buy put for protection, isn't is like there is no put. only call buy from synthetic future left. so finally, we are just buying call! Please some one clarify
Thank you for the comment. You raised a good question. As we explained in the video at 52:45, the strike price for the synthetic futures will be different as it also includes the forwarding cost. On the other hand, we want hedging from the current level, so we will purchase ATM put options at the current level. Overall, the strike prices for the synthetic futures and the hedging puts will be different.
Synthtic future next strike price का बना लिया जाए तो शायद आपकी problem solve हो जाएगी
May be
Ans. There are 3 reasons for that
Tax prudence - Investing in equity & keep shifting the profits to ETF will tend to have lower tax than what you are suggesting
When the market goes up - You would want to lock your profits by shifting to higher strikes. ITM call will be difficult to trade as against an OTM Put (as in the case of of this strategy)
No opportunity to reduce cost by using Synthetic future - You can buy a September synthetic and December put, if September Synthetic is cheaper. Similarly, you can buy different strike synthetic if that is cheaper. So if you are using only call, you are leaving money on table to reduce the cost
14:57 Suuuuuuuuuuuuuuuuuuuuuuuuuuuuuper.
But when to book at market crash
Why don't you sell far otm monthly covered call to cover insurance cost
Great idea, I am also thinking about it. But Govind ji says that upside should be always open. For this reason,he don't mention that.
Can it be implemented to monthly stock also
When exactly to book in put?
Cause all depends on that
Real question ❓
Vivek sir, Please answer the million dollar question
Well even if I agree to his point then tell me how do I know at what point do I square off my Puts and put the money into ETF? How do i know that market has hit the bottom?
Hello sir can u do put back spread for protection
For Individual stock you can calculate hedge ratio based on Beta of stock ,
Govind sir very good video and thank you Vivek sir one query if mkt is trading on 24500 now in nifty and we have synthetic future of 24500 and buy put of 24500 for hedging,.. now suppose mkt crashes to 23500, so at that time to excercise insurance 😊, do I need to flip only put of 24500 and buy new put of 23500 , or I should flip both synthetic fut and put both and buy new position at 23500 for both synthetic fut and put at strike price of 23500?
1:02:20 Yes that's how I trade Nasdaq Futures in US and make dough. I m that Smart Vyakti.
Brocker financing charges?
Wich expiry i futucher buy and wich expiry i buy put
Can we create synthetic future with pledged margin?
when to cover put? if market going down and put prices increase , we sell put and market goes futher down.
Sir Nifty bee le sakte hai future ki badle
Can be taken. The only disadvantage is you are leaving interest arbitrage on table which reduces cost by 1.5-2% which can be very handy when market is in a range and in absolute terms will have huge difference in long term
how to buy index
Synthetic future is equivalent to 35:15 future and future is equivalent to deep ITM call buy option then we can buy simply deep ITM instead synthetic future please correct me if am wrong
I think from collateral margin you can't buy options. You can use it for selling options or future . So if you buy itm option you need to extra cash
This works theoretically. Not practically. When market falls, we never know where is the bottom. So we can never encash at bottom.
Correct. Govindji is assuming that we will exit at the exact bottom. Also Markets dont fall in a straight line. There are strong intraday pullbacks which can make one exit
Exactly
You have to squire off your position in Dec only
See the video in full. Go to 51:55 time stamp. He answers this with value added approach
He said that at this time. I agree. But his calculation is not based on that. That is based on bottom. Not December time frame.
Sir thanks for details explanation and video. One query, when to move to next month on synthetic future , lets say we bought synthetic future on 3rd May (for 30th May nifty strike price 22500 call buy and put sell) and we bought 22700 put also for hedging, then on 29th may we should roll over on 29th May or on 20th May or when? to next month June.
Good question. This will provide more clarification for others as well. The answer is as follows:
As we explained in the video, we will purchase the December month synthetic futures and hedging. Generally, next year's options also gain liquidity around November. Hence, we roll over the position in November. The second advantage is that we don't have to pay for the sharp decline in the options' time value during the last month.
Collateral ka full margin thodi milta hai?
Theoretically it is shown that it works best but I have few questions:
1. When market goes down it shows that there is no loss but actually 30% tax loss was not considered on the income from hedged put
2. How to encash hedged PUT to increase the investment quantity with below limitation:
a. If PUT becomes deep ITM due to crash like 2020, it will be highly illiquid to encash
b. If you can not encash then you don't get the gain of buying PUT
c. During bear market when you encash PUT then next hedge cost will be much more due to high VIX
3. We can not time the market so have to keep rolling over the PUT if market keeps going down, this can increase PUT cost due to increasing VIX at every roll over or pullback before correction so this can drastically increase the hedge cost
add on 30% taxes which ever you got profit from put side...he is just fooling people nothing else..i think covered call is much better option than this..
Well, one is going to lose in PE option some years, and gain some other years, if you have had a loss first you can carry that over to be adjusted against any F&O gains for next 8 years, so a good part of the PE gains will be balanced out with losses you will incur on PEs.
@@Meditrader Not really. If the total profit earned on Put in say 10 years is same as total cost paid (Loss) on put then, technically, there is no profit or no loss from Put in 10 years. which is not the case here. so this is not correct answer. Correct answer may be that he is declaring long term puts as hedging hence treated as long term investment hence may be declared as 10% capital gain instead of 30% tax. That is the only option I can think of.,.
That’s exactly is my point too … this guys never traded and making fool of folks !
You have raised some good points here. This will help people gain more clarity about the strategy. Let's explain them one by one:
1. When the market falls, puts will generate profits on the full 100% exposure, but this will be offset by the loss from 70% of the futures. Additionally, the premium paid for puts and the future forwarding cost will also be deducted, making it tax-friendly.
2. We generally shift the strikes before the put options become illiquid. However, if the put options do become illiquid, we can square them off with synthetic put options.
3. We should shift the puts, but we need to consider the cost-benefit of the shift. Regardless, at maturity, the puts will automatically be shifted.
Synthetic Futures creation will be of recent expiry or Long term expiry
@kurbilav this will depend on which synthetic future is running at logical cost. It may vary from quarterly to December expiry