Hedging Nifty Futures with Mini Nifty

#1
Dear Friends,

I build futures positions (max 4 lots) at one go. Do not believe in buying 1 at a time as the very nature of the market will never let you get the best average price. Also market if very volatile 1 lot is fine which I can carry for 4-5 days.

My strategy has been to go long/short, carry the position for few days for the target of at least 100 - 250 points per trade depending on volatility.

From the past few days I am using a strategy of using Mini Nifty as a hedge for Nifty Futures and found that it works well if used particularly for profit protection.

For eg: I shorted 2 lots @ 5013 last Thursay, still holding. Today when the market momentarily changed direction @ around 4800, I went long on 4 lots of mini nifty with SL of 4790, which ultimately got hit, but protected my profits from the Nifty trade. In case 4800 would not have been broken and the direction would have been upwards, my loss in the Nifty would be offset by Mini Nifty.
At end of the day, the loss is a nominal loss as my position was covered against uncertainity at that period.

Would also like to know if anyone hedges Nifty Futures with options.

Do let me know if anyone on this forum has been using this or any other sort of Hedging strategy.

Regards

Ketan
 
#2
Dear Friends,

I build futures positions (max 4 lots) at one go. Do not believe in buying 1 at a time as the very nature of the market will never let you get the best average price. Also market if very volatile 1 lot is fine which I can carry for 4-5 days.

My strategy has been to go long/short, carry the position for few days for the target of at least 100 - 250 points per trade depending on volatility.

From the past few days I am using a strategy of using Mini Nifty as a hedge for Nifty Futures and found that it works well if used particularly for profit protection.

For eg: I shorted 2 lots @ 5013 last Thursay, still holding. Today when the market momentarily changed direction @ around 4800, I went long on 4 lots of mini nifty with SL of 4790, which ultimately got hit, but protected my profits from the Nifty trade. In case 4800 would not have been broken and the direction would have been upwards, my loss in the Nifty would be offset by Mini Nifty.
At end of the day, the loss is a nominal loss as my position was covered against uncertainity at that period.

Would also like to know if anyone hedges Nifty Futures with options.

Do let me know if anyone on this forum has been using this or any other sort of Hedging strategy.

Regards

Ketan
hi ketan
as i know this is not a proper hedging the first trade which is short on nifty is favor to u.... if at all it goes wrong where ur hedge cud have landed. in my opinion hedge means the time u have initiate the trade u have to do hedge so that if the trade goes left or right u shud be in a safe(not on a huge loss) or profitable. instead of hedging with mini nifty u can try it out with options either covered call or covered put kind of stuff.
regards
srini
 

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