Systematic Portfolio Hedging Plan (16th Nov, 2022); Shreyas Bandi
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- Опубліковано 8 вер 2024
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This guy is next level.
Sorry but I am ahead of this guy.
Real use of options for a change!. Brilliant
Amazing thought process and nicely explained covering the exit strategy as well.
Now, although my equity portfolio size is lower than 10% of yours...even I'm tempted to lock in part of my portfolio profits.
Thanks for this amazing video!
Hello shreyas
Trading and investing are become part of my life now
Extremely well explained
These are very useful strategies, and excellent value for readers. Thanks for sharing your techniques.
Hi Shreyas, exit plan is something new I learned. Thanks. One query I have in mind is why not buy March,2023 Put and keep on rolling every 3 months because there's minimal extrinsic value in 3 months far ITM Puts and that way eventually you end up paying less premium for the Puts. Or am I missing something here?
No, it would be very bad decision. March 20K put is at 1150, whereas Dec 20K put at 1450. So just by paying 300 extra you get 6 more months of safety. Instead if u buy every 3 month u will end up paying more than double in premiums. Wont be a wise decision.
I think point to note is Beta of the holding should be close to 1. With NiftyBees its perfectly matches that Beta but if its a composite profile Beta might need to be calculated and it will impact the actual values shown in the calculation
Yes
There is a way to calculate the beta for you entire portfolio search on you tube. You’ll get plenty. Google sheets or Apple numbers have a function to directly fetch the beta value of a stock just like they fetch the prices.
Is reliance decent beta? Can i don this wifh reliance?
@@mozo199 YES THE BETA FOR RELIANCE IS 0.95, AND YOU SHOULD HAVE ATLEAST MORE THAN 10 L OF RELIANCE TO HEDGE IT WITH 1 LOT OF DEC 2023 20000 PE
@@wassupsweetie oh but i forgot sgock options only have 3 months.
Shreyas bandi must start a hedge fund in India.
Hedge funds or any type of Funds are not allowed to trade in FNO in India. Thats the reason there are no Hedge funds in India for Public. Many run shadow PMS services in the name of hedge funds
Always nice to see your videos!!
Hi Shreyas, I am a new follower of your UA-cam channel as well as Twitter handle. Very happy to have found this channel, all amazing stuff here..btw have u liquidated these PUT options now as markets already hit 200 ema and reversed or u r still holding.
What will be your plan like if Nifty moves up to 21000 by next year end. At what point will you book the PEs in loss and may be shift it higher by buying 21000 PE or 22000 PE.
crystal clear. Understood your point
We miss your trading videos
Systematic thought process..
What if in case the the stocks in portfolio, don't move higher in tandum with Nifty....
This strategy is great for non defensive stocks.. may prove tricky for defensive one's
Portfolio beta has to be very close to 1
@@NiftyBN thank you for this unique video.....even portfolio beta is 1..any stock can move against the nifty..am I wrong?
Wishing a Happy New Year 🎉🎊🎉🎊💐💐
Hi Shreyas, looking for your thoughts on the below alternative. Can we invest the entire portfolio in gsecs for 7-8% and pledge it for collateral. Using the margin, we can buy hedge and futures to make our portfolio. By this way we can avoid the hedge cost .
I think you need to pay cash to buy options like shares. cant use collateral .
@@aparnadange7168 we can use collateral for futures and sell options, not buy
Awesome Video on Hedging the PF.
Is this hedging valid if we have non nifty 50 stocks in our portfolio?
Will be less Valid the more the beta of your portfolio
Hi Shreyas, What are the tax implications of this and does the PNL get impacted due to either the puts or ETFs?
I think locking in profits without much tax is one of the primary reasons for This exersise. Or else you can always sell holdings and lockin profits
Few questions.. what if market stays sideways for long time, whats the exit plan then ?
Why not sell calls to hedge? You are already paying so much for buyinh
Hi Shreyas, I didn't really understand when should I enter in this strategy. Exit was very well explained. But would be grateful if you could help with when to enter, like how far from 200DMA?
Underlying outside BollingerBand
What is your exit strategy for your portfolio? You've talked only about exiting your put options, Sir?
What is the exact entry criteria? When to start buying PUT (initial tranch)? 18400 in your example. Why to start @ 18400?
That is nearby ATH of nifty. Criteria is to lock Profit that u have accured in cash portfolio.
Is there any benefit of purchasing and liquidating this put option in tranches, compared to buying it all Today in one go and same for selling on the exit criteria?
I know there must be a reason, but would be great to know the details or the math
Same like benefits of SIP during investment, dont want to commit at lumpsump prices
@@NiftyBN Got it, Thanks!
Thanks shreyas
Excellent approach!
Hi shreyas ,
Did you book your profits ? As per the plan 200 Ema is the point where you will book your profits right ? It would be great if you could update. Thanks in advance.
Hi Shreyas, have a question on this video of yours that was put up in November. We are more or less at the same levels on Nifty with far more lower VIX. So, do you think it wud be good to apply a similar portfolio hedging strategy now ? If yes, what strikes wud you choose ?
Buying puts on Monday!
but this hedging may not work for mid and small cap stocks in our portfolio
It won't
Really a step ahead..
Amazing concept 👌🏾
Hi Shreyas, question. What happens when you book Put option profit at 200 dma and market keeps falling below 200 dma ?? What are the options we can use here?
Excellent sir,
Spot 18400 then buy itm put 18800, if nifty move near 18800 then hold 18800 PE or rollover to 19200 pe ?
He is buying 20000 PUT in 4 tranches when nifty at 18400, 18600, 18800..
Great video Shreyas. This is exactly what I was looking for. You gave me a direction to think on and protect my portfolio. Would like to connect with you personally by email or phone. Please share your contact details which is convenient to you. Thanks buddy
superb idea
King👑
Can you make a video on synthetic futures and its applications?
Innovative approach
Hi Shreyas, what your view on converting 20% of the portfolio to bonds rather that keep paying insurance cost (put premium - as you might have to renew it after Dec). Another view can be difference of return b/w bonds and equity can be considered as insurance cost (with additional peace of mind of regular interest payouts :) )
Already have 25% in bonds debt and gold
@@NiftyBN thumbs-up. Thank you for validating the confidence.
Just a quick gig:
Deep ITM Puts - Medical Insurance
Deep OTM Puts - Term Insurance
:)
Very well put 😁
@@NiftyBN Timing is too good - almost lowest VIX/IV (no panic as of now). Current year Dec Puts are at 150 discount to intrinsic value(some arbitrage opportunity exists)
Why u are buying put option if u want to lock then u can sell also
Honestly, this achieves the same effective outcome as booking 5% at every 200pt upmove and then waiting for a correction to 200dma to re add, so yes not very different to selling, not selling because my buy process are extremely low and capital gains will be massive in the FY
Bro, what happens to my losses if my covered call goes ITM? If I am delivering my stocks to the buyer?
Hi Shreyas, this is great learning video. I just have one question. You explained how you are going to add more puts if Nifty goes higher. But when it starts going down, are you going to add more lots in the same way i.e. for every 200 points drop? Because initially you have just 3 lots and you planned to buy 12 in total to cover 20%.
Nope, will book regardless at 200 dma even if I don't get all 4 tranches
Are you planning to continue doing this hedging in 2023 also?
Awesome sirji.
Why buy PE why not short nifty fut
What if Nifty continues to fall below 200 EMA , while u have already liquidated the puts and moved to equity ??? What will be the course of action ...thank u
Can't do much, will liquidate also in tranches because one can't time the bottom
Thanks for sharing!
Shreyas sir, what if my portfolio is 5L , this calculation I could not fit in into that.
Hi Syreyash, is it possible to use same strategy if i dont have any equity but would like to long the future worth 1 CR and do the same?
Google collar strategies
U are only locking profits here with 20% insurance. If u buy future, u dont have any profit as of now. So whats are u locking here. Furthermore the insurance is for 20%, rest 80% is prone to loss. If u go with FUT and MKT crashes in next few weeks, will u be able to digest the MTM loss of 10-15 Lakhs in FUT. Just think about it and decide urself what u were trying to do. Brain stops working when u suddenly see few lakhs MTM losses in FNO and u end up booking those losses instead of adjustment.
He have equity and not future position... He can hold as long as he want .
When would you exit puts if the market creates an all time high and sustains?
why exit, its an insurance and hedge against ur portfolio. Only place where u need to exit is when mifty hits 200 dma low, there u need to book huge profit in these puts.
Hi shreyas..
Why not coveredcall? Instead of this..
I'm sure he'll be adding call shorts of far OTM to lower the cost of hedging but not in longer dated maturity, rather then shorter duration !!
Also buying put option is safer strategy rather than selling call option !!
If you have 1 Cr PF, and you are using covered call with of 5 % value of PF, here your loss can be protected till -5% only, but if PF loss more then -5%, covered call won't protect it ( like Nifty recently down by -15% few months back). Correct me if i am wrong!!!
@@mhkrishnan yes u r right but at the same time u dont cap ur upside. Market goes up slowly .. so by the time nifty reach 20 k . Premiums gonna melt..
So there r pros and cons to every strategy.
Hi Shreyas....I am following your strategy that you had shared in elearn market (Vivek Bajaj sir's video) .....Today I shorted call and put based on this strategy but vix got increased suddenly and the total premium I had collected (109) rs it went quickly to (140) rupees.......can you please guide me how to manage position when vix increases suddenly please....
lol, unless u have complete knowledge about an instrument dont play with it. Options behaviour is very difficult to predict and more difficult to trade. Simple advice, paper trade for atleast 6 months before playing with fire called options.
@@Delta.Hedger So true brother...But I was testing his strategy with only 1 lot
Can we buy far month options like June or December to save time value ? Does this make any sense?
Buy with limit orders or you will pay huge in sllipage as far months are illiquid
Hi Shreyas How about selling OTM monthly Puts against this ITM Far put buy to reduce the cost?
All kinds of things can be done to reduce cost over time
We can do the same for stocks as well right? Cause nifty may not cover all the other mid caps stocks?
stocks dont have long term options contracts like Nifty, so not possible.
Amazing shreyas
I have altogether a different question. I don't have an equity portfolio. I have some liquid cash in my trading account
Suppose if I buy just just 20k pe of dec.
Is there any method to hedge this long term put buy positions?
wow, u want to hedge a hedging instrument. The primary aim of FNO is to hedge cash portfolio and thats the way they should be used for hedging. If u dont have capital for cash portfolio then first create a capital for cash portfolio. I can suggest another strategy involving low capital, but that will be very risky and needs adjustments in case MKT moves swiftly and requires thorough options knowledge for adjustment.
@@Delta.Hedger please share the strategy
When to buy? After Dec expiry then should we buy for next Dec 2024?
When market sentiment is very bullish with no fear, like vix below 15
Also 2024 won't have any liquidity
Sir instead of buying pe can't we hedge our portfolio by selling call options by pledging our portfolio for the hedging benefit please reply ❤️
Covered call on portfolio in low IV using long term options is always a bad idea. Covered calls I prefer to do stock specific when there is a big call side IV spike in monthly options, this is for annual PF hedging
Over time all kinds of additions can be made to this to reduce cost of the hedge
If you book long puts when markets come to 200dma you will have to pay tax on profits earned.. whereas long term capital gains is only 10% na?
Buy prices are quite low so capital gains will be quite large
How did u build your portfolio of investment , or u considering only nifty bees for this 2% loss in case of up move or all??
No he's not considering only Nifty Bees as his portfolio !! He's using Nifty as proxy for his entire Portfolio. Though he have most of his holdings in nifty 50 stocks though !!
Are you SEBI registered investment advisor?
Strategy is good. Can you buy long dated options on Zerodha?
Almost all brokers allow this AFAIK.
What is liquidate and put into equity means? Can explain it with example
Sell long puts and buy nifty bees as we test 200dma
@@NiftyBN Thanks got it, close puts and buy nifty bees 👍
Bro if the market stays at 18400 only then what's the case ?? You got 1600 points remain the same and what's the net cost of 12 lots of PE BOUGHT?
0.2%
What are the deawbacks of this method besides liquidity?
Opportunity cost
Why December not March Expiry? That will be cheaper..
but u will need to buy it again in March for June series and again in June for Dec series. When u sum it all, the cost will be twice. March puts are trading just 300 bucks cheaper but u loose 6 months time value. When buying hedge try to buy longer duration and sell shorter duration.
Why not selling CE ?? Beacuse you dont have to pay from pocket and you also get the premium in the account.. which could be used elsewhere
I'm sure he'll be adding call shorts of far OTM to lower the cost of hedging but not in longer dated maturity, rather then shorter duration !!
Also buying put option is safer strategy rather than selling call option !!
I think that will be like covered calls where only premium that is collected will be the profit if nifty falls below that premium coverage then there will be no hedge but in this case as shreyas said even if nifty goes to Zero account will be safe upto 1Cr which is 20%. I think it makes sense correct me if I am wrong!
Current scenario is low VIX. Under low VIX environment its always beneficial to buy options instead of selling, even more if its long dated options. U can sell near expiry calls to reduce cost but that will be secondary.
bro if 200 dma hit 6 months later then put options will be losing right? then how would you exit put option in profit?
Not necessarily the case! Time value in this is very little, regardless it's always a trade off between opportunity cost and protection
Why don’t you sell a long call option instead? Like a covered call
Covered call on portfolio in low IV using long term options is always a bad idea. Covered calls I prefer to do stock specific when there is a big call side IV spike in monthly options, this is for annual PF hedging
Over time all kinds of additions can be made to this to reduce cost of the hedge
Hi shreyas, since expiry is on 22nd dec, how is it showing 23rd dec on your screen, unable to find any such PE option
It is not 23rd Dec, it is Dec 2023
@@NiftyBN Gotcha , thanks for the clarification
So we are insuring 20% value of portfolio by paying 2% premium- thereby making the effective "insurance cost"for the insured part 10%
Isnt 10% a bit too much?🤔
Also sir what's the significance of hitting the 200dma?
Thank you for your lucid explaination
The cost is 2% if he buys all 12 lots today itself !! He's trying to average on this strike when market goes higher, hence put option will be cheaper then this price of 2%. Also I'm sure he'll sell OTM call options in shorter duration to lower his hedging cost.
So can't look at it that. Because if market doesn't go up, cost will be 0.2% not 2%, 2% only if portfolio makes 10% gain
Why not sell the Call option instead of buying pe?
To get the time decay benefit. Am I right?
@@ragavanmba yes.
Call sell is limited in it's coverage, and covered calls I prefer to do in monthlies on stocks based on IVs
So every month you will rollover the PUT option
No thisnis 2023 Dec pe
Why not short nifty future in same ratio? 3x 3x 3x 3x
Which future is available for December 2023, the synthetic can be used yes 😃
@@NiftyBN you can short dec 22 and roll over at expiry. secondly we can use margin money to do so. no cash required, third dec22 is trading at good premium so if market dosen't move any where we can eat that premium as well.
Will have to roll over each month, and each time future will have a premium
@@NiftyBN yes roll over every quarter and eat premium.
Why not sell call ?
Covered call on portfolio in low IV using long term options is always a bad idea. Covered calls I prefer to do stock specific when there is a big call side IV spike in monthly options, this is for annual PF hedging
Over time all kinds of additions can be made to this to reduce cost of the hedge
@@NiftyBN thank you
Blank. Couldn't understand it a bit
Maaza nai aaya
Using OTM VS ITM puts ulis clear, can this b done for monthly expiry? This is like tail risk hedging. But u r only protecting 20% of portfolio! How to protect 100% with 3% of capital? Also ur exit strategy of using 200 DMA isn't clear!
So for practical purposes think of this as booking profit, for every 200pt upmove I'm booking 5%, till 20% and then waiting for an opportunity to re enter during some correction to 200dma
This isnt for protection against tail risk, for that baspreads are a better approach