Lets say I take delivery on a bank stock for say 2 lakhs (UCO, Bank of Maharashtra, Vijaya are in 50's, Dena is also within Rs.100 segment) so about 3400 shares (at about 58) i take delivery.
Now after it is in my demat account, lets say it is in a range bound market of 56 to 60 with 58 being the trading average per day. (Lets just give it an example instead of being too practical)
Now I am seeing the market trend and short selling some quantity - say 500 shares at 60 and if it goes up, i dont have to worry, if it comes down I can square it up on the same day, pocket the margin increase and for that amount I buy more shares of that particular counter.
Giving a simpler example here is the equation...
Rs.58 average 3400 shares i hold for 2 lakhs.
Now I if am able to make about 1000 Rupees a day by short selling the shares and booking profits the same day by squaring up and in case the price increases,I will give delivery on the ones i have on hand - so not an issue if it increases also. So the 1000 rupees that is made is further bought as shares - say around 15 to 20 shares a day on an average.
Now you could ask why should i do this when the stock will appreciate by its own even if i were to just invest and keep quiet. The point is i am wanting to encash on the varience in stock price movements on each trading day and when I do that I stand a chance in accumilating more of those shares and on one fine day i will have more volume of shares plus the shares appreciate.
If it comes down also still this trick can be done - and infact we atleast will have additional volumes of shares to compensate the price decrease.
Has anybody tried this strategy before?
Now after it is in my demat account, lets say it is in a range bound market of 56 to 60 with 58 being the trading average per day. (Lets just give it an example instead of being too practical)
Now I am seeing the market trend and short selling some quantity - say 500 shares at 60 and if it goes up, i dont have to worry, if it comes down I can square it up on the same day, pocket the margin increase and for that amount I buy more shares of that particular counter.
Giving a simpler example here is the equation...
Rs.58 average 3400 shares i hold for 2 lakhs.
Now I if am able to make about 1000 Rupees a day by short selling the shares and booking profits the same day by squaring up and in case the price increases,I will give delivery on the ones i have on hand - so not an issue if it increases also. So the 1000 rupees that is made is further bought as shares - say around 15 to 20 shares a day on an average.
Now you could ask why should i do this when the stock will appreciate by its own even if i were to just invest and keep quiet. The point is i am wanting to encash on the varience in stock price movements on each trading day and when I do that I stand a chance in accumilating more of those shares and on one fine day i will have more volume of shares plus the shares appreciate.
If it comes down also still this trick can be done - and infact we atleast will have additional volumes of shares to compensate the price decrease.
Has anybody tried this strategy before?
