How to Hedge Futures with Options

#1
Hai friends,

I have Query About How to Hedge Futures With Options Please Guide me With your Valuble Information & Ideas .........

Last month I Attend a seminar in Chennai **** financials. he said he is an hedge fund manager he have a track record of 90% above each year constantly
& They said the most traders cannot see risk & money mgt the most important element in financial industry


1.) The FUTURES risk can be managed by OPTIONS
2.) The purpose of Options markets is to reduce FUTURES positions risk
3.) & Finally in this Method the Maximum Draw down is not more than 5%
(based on your account size)
WHATEVER THE MARKET CONDITION IS (RISK FREE GET RICH) THE ONLY RISK IS YOUR PREMIUM

& Finally My Question is

Suppose mcx Allowed Options (i never tried nse )

(E.G)

I Take Position On Gold

Buy =29,200
Stop loss =29,000
Tick value = 100 rs

My TOTAL RISK AMOUNT IS (200*100) = 20,000

in this above how i hedge options gold ............ for premium risk only


Thankyou:thumb::thumb::thumb:
 
#2
Unfortunately Commodity Options are not yet available for us. It has been in the works for a few years already - and hopefully we will have it sometime in the future.

There are definitely a lot of benefits with hedging with options. But before you decide to jump in eventually - make sure you understand it well. Else you are going to be in a shock with the results (unless the market moves up a lot or falls a lot).

R
 
#3
Unfortunately Commodity Options are not yet available for us. It has been in the works for a few years already - and hopefully we will have it sometime in the future.

There are definitely a lot of benefits with hedging with options. But before you decide to jump in eventually - make sure you understand it well. Else you are going to be in a shock with the results (unless the market moves up a lot or falls a lot
).

R
Would you please elaborate?

Thanks
 
Last edited:
#4
Hai friends,

I have Query About How to Hedge Futures With Options Please Guide me With your Valuble Information & Ideas .........

Last month I Attend a seminar in Chennai **** financials. he said he is an hedge fund manager he have a track record of 90% above each year constantly
& They said the most traders cannot see risk & money mgt the most important element in financial industry


1.) The FUTURES risk can be managed by OPTIONS
2.) The purpose of Options markets is to reduce FUTURES positions risk
3.) & Finally in this Method the Maximum Draw down is not more than 5%
(based on your account size)
WHATEVER THE MARKET CONDITION IS (RISK FREE GET RICH) THE ONLY RISK IS YOUR PREMIUM

& Finally My Question is

Suppose mcx Allowed Options (i never tried nse )

(E.G)

I Take Position On Gold

Buy =29,200
Stop loss =29,000
Tick value = 100 rs

My TOTAL RISK AMOUNT IS (200*100) = 20,000

in this above how i hedge options gold ............ for premium risk only


Thankyou:thumb::thumb::thumb:
anybody help please...................
 

deba72

Well-Known Member
#5
anybody help please...................
Hedging can be done in different ways, depending on trend and phase of the market...

1. Buy futures sell CE

2. Sell Futures Sell PE

3. Buy CE, Buy PE

4. Sell CE , Sell PE....

etc etc...

Now one has to decide on the method and that depends on so many factors like whether market is sideways or trending, current and expected volatility, days till expiry, cost of carry etc etc...


P.S --- nothing is risk free in this world... you can manage and limit risk but you can't eliminate risk totally..
 
#6
Hedging can be done in different ways, depending on trend and phase of the market...

1. Buy futures sell CE

2. Sell Futures Sell PE

3. Buy CE, Buy PE

4. Sell CE , Sell PE....

etc etc...

Now one has to decide on the method and that depends on so many factors like whether market is sideways or trending, current and expected volatility, days till expiry, cost of carry etc etc...


P.S --- nothing is risk free in this world... you can manage and limit risk but you can't eliminate risk totally..
thankyou bro pls more its possible to do it on daytrading :thumb::thumb::thumb:
 

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