Day Trading Stocks & Futures

[Raj232]

What happened.Nobody posting today ?

Market might surprise, so just watching this week... talks between world leaders going on in Singapore etc, lets wait for the outcome

 

[nitingosavi]

NIfty spot hourly

Yesbank Hourly (futures)

 

[sanju005ind]

Query : when taking a swing trading suppose I would like to cover my risk before my position becomes profitable.Which is the best way of hedging it.

Say for example today I want to go long futures of tatamotors of at 312 and I have a target of 350. what would be the best way of hedging my risk.
1. Buy a 310 Put.
2. Sell 310 Call.
3. Sell Next Months Future.

 

[pannet1]

Query : when taking a swing trading suppose I would like to cover my risk before my position becomes profitable.Which is the best way of hedging it.

Say for example today I want to go long futures of tatamotors of at 312 and I have a target of 350. what would be the best way of hedging my risk.
1. Buy a 310 Put.
2. Sell 310 Call.
3. Sell Next Months Future.

1. Buy a 310 Put.
Good balance between the hedge cost and Reward. If your view is correct, you only loose the hedge cost. but gain the entire future profit of (350-312).

2. Sell 310 Call.
If your view is wrong, the sold call acts like short future once it becomes ITM (beyond 310).

3. Sell next month future
This basically becomes like an arbritrage. where you gain the price differentials minus transaction cost + slippage.

In short, You pay more for the hedge you gain more (if you are right) and vice versa.

 

[onequorauser]

Query : when taking a swing trading suppose I would like to cover my risk before my position becomes profitable.Which is the best way of hedging it.

Say for example today I want to go long futures of tatamotors of at 312 and I have a target of 350. what would be the best way of hedging my risk.
1. Buy a 310 Put.
2. Sell 310 Call.
3. Sell Next Months Future.

thinking out aloud..shorting a call does not make sense because it will only give you limited cover and I believe you are only trying to cover those days when market goes berserk

If you sell next months future, you are getting into a spread. you will minimise losses but also minimise profits. A lot of people in prop trading do this.

Buying a put might also work.. but you will have to understand that when your futures start giving you profits calls will start losing money. you could work on getting a little OTM that does not have a significant delta but then the protection will also reduce to that extend

 

[pannet1]

1. Buy a 310 Put.
Good balance between the hedge cost and Reward. If your view is correct, you only loose the hedge cost. but gain the entire future profit of (350-312).

2. Sell 310 Call.
If your view is wrong, the sold call acts like short future once it becomes ITM (beyond 310).

3. Sell next month future
This basically becomes like an arbritrage. where you gain the price differentials minus transaction cost + slippage.

In short, You pay more for the hedge you gain more (if you are right) and vice versa.

Query : when taking a swing trading suppose I would like to cover my risk before my position becomes profitable.Which is the best way of hedging it.

Say for example today I want to go long futures of tatamotors of at 312 and I have a target of 350. what would be the best way of hedging my risk.
1. Buy a 310 Put.
2. Sell 310 Call.
3. Sell Next Months Future.

Query : when taking a swing trading suppose I would like to cover my risk before my position becomes profitable.Which is the best way of hedging it.

Say for example today I want to go long futures of tatamotors of at 312 and I have a target of 350. what would be the best way of hedging my risk.
1. Buy a 310 Put.
2. Sell 310 Call.
3. Sell Next Months Future.

In a perfect world, you buy ITM call (acts nearly like a long future) and sell 2 calls at 350 strike.
Hopefully if TATAMOTO dances it way (going sideways) to the target, you gain both on the ITM call and the short Call. There is a risk of TataMotor surging to 350 immediately and your sold calls becomes ITM and loose more than what you gained with the ITM call.

 

[onequorauser]

thinking out aloud..shorting a call does not make sense because it will only give you limited cover and I believe you are only trying to cover those days when market goes berserk

If you sell next months future, you are getting into a spread. you will minimise losses but also minimise profits. A lot of people in prop trading do this.

Buying a put might also work.. but you will have to understand that when your futures start giving you profits calls will start losing money. you could work on getting a little OTM that does not have a significant delta but then the protection will also reduce to that extend

In fact another option of limited risk could be to buy OTM Calls. They will be cheap and will reward you handsomely if you are right

 

[iwillwin]

BNF premium to discount now

 

[Raj232]

In a perfect world, you buy ITM call (acts nearly like a long future) and sell 2 calls at 350 strike.
Hopefully if TATAMOTO dances it way (going sideways) to the target, you gain both on the ITM call and the short Call. There is a risk of TataMotor surging to 350 immediately and your sold calls becomes ITM and loose more than what you gained with the ITM call.

Yes I think @pannet1 has summarised my view.
But my view would be still a bit different.
1. Buy TM Future @ 312
2. Sell 350 CALL .. so as it moves towards the target, the value of the CE would remain almost same.
3. Sell 320 PUT .. @ 30% distance of the target PUT should probably expire worthless.
.. but not sure how it would work in reality

 

[nil.nik.9777]

Downward move saved day today.
Was in losses of 10k on short trades in Reliance expecting downside.
As always expected move comes late so had to get out of trades as soon as costs recovered.