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Are Vivek ji very happy to hear My friend Govind ji after long time. He is very good speaker/ teacher to understand maths ,whenever he start speaking, log sunte hi rahate hai great Vivek ji, ones start to see no one can stop till end 👌👌😀👍
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Sir, from 2015 to till date , i calculate, according to your investment style for rs 10lakh investment, 30% nifty bees purchased and 70% bond investment@7%, i got rs2122603 but if i purchased simply nifty bees ETF of 10lakh at Rs83.85 than i got rs2301729.. if anyone calculate pls give me his answer..
@@BHUPINDERSINGH-wo6nx sir can u pls tell wht was your return in both cases during low made in corona fall ...this will give better idea.... pls take it in positive way,this is not to demotivate u but to get clear idea abt strategy shared,as it provides protection in downfall....so your figures will help lot... specially me...thanks
@@BHUPINDERSINGH-wo6nx If you are not taking any action intra-year, then practically end to end, market has been in range or kept on rising. Given this, you must make lesser money than ETF and this is what your working is showing.
Sorry, I have a question here. In the video, it is suggested that we buy futures (synthetic or actual) and buy a put option. I do not understand how it is any different from just plain vanilla buying a call option simply. Because, you are going to pay premium for buying PE as well as CE. If markets expire at the same level, the PE with futures strategy will be in loss because the PE premium will have decayed but future will be cost to cost. Similarly if we simply buy a CE, same thing will happen. In fact, if you compare both these things in OPSTRA, you will get the exact same pay off graph and Profit/Loss. Secondly, if you are buying a CE, then all my margin money will also be free. Thirdly, by buying a CE, I am eliminating the MTM maintaining requirements as well as I do not have to worry about roll over and thus the slippages associated with the price difference between futures of this month vs the next month. Also, the video states that the profit made from PE in case markets fall can be reinvested at a lower level. How is this possible ? if you get profit in PE, that money plus the premium you paid for it will be deducted from you account because you would have also made a loss in futures who will pay for that ? Hence based on these points above, please if possible, explain to us why we simply should not buy a CE of annual expiry instead of doing all these complicated things
@@laxsri Sir we do not pay in cash, but when you do futures, you have to pay MTM in cash right? plus, when you are buying put option for hedging, you are anyways paying cash, so what is the point in doing all these complicated things ? instead whatever premium you are spending in hedging for buying put option, just buy a call option with that same amount. Result, 1. all margin will be free 2. you do not have to worry about MTM difference 3. Yo do not have to roll over future contracts hence nullifying the roll over cost every month. So why do all this ?
The synthetic future is for month over month only but, the long-term Put you will buy for hedging would be yearly. Fall can be reinvested - When the market falls you will only loose your PE premium but the profit you have will be invested at better levels. So, next time when market reaches to same level, you will have ahigher quantity than you had before the fall(Profitable).
@@shukbindersingh9875 Bro, firstly, let us assume you buy a future at 17500 and buy a yearly put option at 17500. Now by November (or by December expiry if you decide to keep the position and not roll over to the next year) if nifty is trading at 16500, toy will make a (1000-premium paid) rs profit in PE you have bought. But, that profit will be adjusted against the loss in the futures which you have also bought at 17500 and is now in a loss of 1000 rs. So you see, the profit in the PE bought is going to be adjusted in the loss against the futures so how can you reinvest ?? it is not possible bro. So basically you are loosing the premium paid here as well. So why not just buy a CE if you are anyways going to loose the premium ?
Correct me if i m wrong...but y not just buy a long term call option and chill....i think it turns out to b the same thing.... Long Fut+ long put = long call ......i guess...
That is correct. But buying Futures and Buying Puts are giving you an extra edge to shift the trades at lower cost. That means..... many times we get the chance to shift the Futures from one maturity to next maturity at lower cost and same is the case with Puts too. But when we trade in Calls, you don't get that option to reduce the cost.
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I have one query. What if the put options of December that we have purchased become deep in the money once market fall 1000 points then liquidity will be a problem. There is no seller
His strategy is just buying december month ATM option every january. How? For that first let's understand his strategy completely : Mr. Vivek Ji, Please put heart in this message if you think that this statement is correct. Buy Nifty worth of 30 lakhs using ETF : NiftyBees 15,000 qty @ Rs 198 (margin required is a little less than 30 lakh) Buy Nifty worth of 70 lakhs using Synthetic Futures : Nifty 18000 CE Buy 400 qty @ 1420 (marging required is 6 lakhs) Nifty 18000 PE Sell 400 qty @ 770 (marging required is 12 lakhs) Buy ATM Put (hedge) of 1 Crore : Nifty 18000 PE Buy 550 qty @ 770 (marging required is 4 lakhs) Positions (all together) : NiftyBees 15,000 qty @ Rs 198 (margin required is a little less than 30 lakh) Nifty 18000 CE Buy 400 qty @ 1420 (marging required is 6 lakhs) Nifty 18000 PE Sell 400 qty @ 770 (marging required is 12 lakhs) Nifty 18000 PE Buy 550 qty @ 770 (marging required is 4 lakhs) If you look carefully, you can understand that Nifty 18000 PE is sold and bought (in positions), so we can re-write this as : NiftyBees 15,000 qty @ 198 (margin required is a little less than 30 lakh) Nifty 18000 CE Buy 400 qty @ 1420 (marging required is 6 lakhs) Nifty 18000 PE Buy 150 qty @ 770 (marging required is 1 lakhs) Now we can see that 15000 qty of nifty bees is perfectly hedged with 150 qty of Nifty 18000 PE. Remaing is 400 qty of Nifty 18000 CE Buy. This is naked option buy. If you analyze these positions, It works the same way as buying 550 qty of 18000 CE. This is why I say it is just pure long term option buying. He is just trying to confuse people into giving him money as most of the people doesn't fully understand what he is saying.
As per what you mentioned it wont be useful when market falls? because you don't own the PUT to secure it? That's why the synthetic futures are not of same expiry of Hedge?
@@amitupadhye5813 if market falls, the max risk is only option premium paid. What I am saying is instead of all these confusions, just buy 550qty of ATM Dec CE on January and the returns will be perfectly matching with the strategy explained by the guest in this video
Post morterm of the strategy: Firstly, Lets assume that nifty moves up steadily by 15-20% per annum for 10 years without crashing (>1000 points in a month) in between. The net cost for hedging and rolling over will eat away into the return which could have been achievd without the hedge and roll over and you will end up earning much lower than the expected 15-20%. So this strategy works well only if there is a crash where hedge protects from loss and the future giving excellent return during recovery from a lower base. In an extreme case where the nifty rises steadily 10% (from December tot December and with little volitility in between), the net return will be zero for 10 years considering the 10% cost. One might argue what-if there is no hedge and the market crashes? Assuming that you are holding nifty index of all 1 crore rupees, you not do anything and just wait for recovery. Secondly, the roll over cost shown here at 3.5% is not true. If you see the current month vs future month future prices, the roll over cost per month is appx. 70 points that translates into 70 x 12 months x 50 lot size for nifty = 42000 which is 5% of 850000 (i.e. value of one lot nifty 17000 x 50). So the cost involved here is more than that shown. Thirdly, in synthetic future also, one has to pay MTM loss. so cash is required in addition to collateral. Anyway, it was a good learning session. Conclusion: You have the right to differ from me.
What is the amount of protective put we have to buy in this strategy?? Let's say i make it on Tuesday(16th aug,22) 1) 17700ce AuG + (3 lots) 2) 17700pe aug - (3 lots) 3) 17700 PE Dec + (??) ( How many lots of protective put should I buy... 3 or just 1)
@@akhilmontu As explained in the video, for full protection, you need to buy 3 lots Dec PE. Now you think you will lose all your hedge money if nifty goes nowhere. That is why this stregy will work in long-term and when there is a crash in between. That is why he suggested this strategy with 8-10 years view
Strategy is good but this strategy can be done very easily instead of all this complex things. Let's understand with an example Considering Nifty @ 18000 on 31st Dec 2021 Now we just have to buy Nifty 18000 CE Dec 2022 Expiry Now suppose 18000 CE premium is around 1200 points So If we want to buy 1 crore worth of quantity thn we have to buy (1cr/18k) = 555 quantity So our cost of buying this call of 550 quantity ( bcz Nifty lot is in multiple of 50) is 1200* 550 = 660000 Rs Now we have approx 93 lakh rs left with us Now put this 93 lakh in debt fund @ 7% per annum and we get approx 6.5 lac return from Debt Funds So now our Risk on Overall 1 crore equity and 93 lakh debt fund portfolio is 6.6lac - 6.5 lac = 10k only And now when Nifty moves above 18000 we will be in profit with no loss and no drawdown of our portfolio Be simple 😀
Dear Bibekji You have raised a few interesting questions which are as follows: 1. "Lets assume that nifty moves up steadily by 15-20% per annum for 10 years without crashing (>1000 points in a month) in between. The net cost for hedging and rolling over will eat away into the return which could have been achieved without the hedge and roll over and you will end up earning much lower than the expected 15-20%. " Ans: You are absolutely correct. If you believe, that in next 10 years Nifty will keep on rising without crashing then you are correct. But the challenge is -> how probable you consider this scenario, against a scenario wherein you believe that market will generate 15-20% return YOY with 2 -3 big dips in between - yesterday it was corona, some time back it was US housing and some other day it was some international issue. 2. "the roll over cost shown here at 3.5% is not true. If you see the current month vs future month future prices, the roll over cost per month is appx. 70 points that translates into 70 x 12 months x 50 lot size for nifty = 42000 which is 5% of 850000 (i.e. value of one lot nifty 17000 x 50). " Ans. You are very good at mathematics and surprisingly you made a small error in your working. 5% is the approx forwarding cost YOY but if you remember the strategy, 70% of fund is only invested using future -> So 70%*5% = 3.5% and hence forwarding cost was mentioned as 3.5% & not 5% 3. " In an extreme case where the nifty rises steadily 10% (from December tot December and with little volatility in between), the net return will be zero for 10 years considering the 10% cost" Ans. You are correct in understanding that Gross cost of investment is 8.5% (3.5% of future & 5% of hedging). But as you are using future, you are saving interest on your Debt at 7%. So 70% saves 7% so your net saving is 5% per annum. So in either of the plan, your cost is around 3.5% or less. So if in case market gives a steady rise of 10% per annum, then you still end up making 6.5% and NOT a ZERO. So, in an extreme case of market rising at 10% every year then no doubt, you will make lesser then market. 4. One might argue what-if there is no hedge and the market crashes? Assuming that you are holding nifty index of all 1 crore rupees, you not do anything and just wait for recovery. Ans. Lets understand this with an example. Scenario 1: Lets say you invested Rs. 1 crore without protection at 18000 and market crashed to 12000. So your investment value becomes Rs. 67 Lacs. Now when market recovers to 18000 your value is back to Rs. 1 crore Scenario 2: You invested Rs. 1 crore with Rs. 1 crore protection at 18000 & market crashed to 12000. Your investment value will be 96.5 lacs (1crore - 3.5Lac). Now when market recovers to 18000 your investment value recovers to 144.75. So having a protection not only gives you peace of mind, in a drop to recovery scenario it not only covers its cost, it helps you beat index by 2-3% over years. If you consider point 1 & point 4 together, then in the likely case of market giving return of 15% over next 10 years and with 2 big dips, the strategy will not only help you survive those 10 years, it will help you generate 17-18% return with a max risk of 4% over any year.
@@nitingarg94 You are right when you see things theoretically. But as you understand the same thing will behave differently depending on how one uses it. An option can be used for speculation and the same thing can be used for hedging. Similarly buying a call option and buying a synthetic future with hedging works a whole lot different. To understand this, we need to understand why synthetic future was being used. We bought futures as they were having low financing costs. To avoid the disadvantages of futures we moved to a synthetic future. So the purpose of buying synthetic futures is to reduce our funding cost. Now, when you invest using synthetic future, you have a multiplicity of strikes and multiplicity of expiries. Now, say June synthetic future is cheaper than December future, then simply buying a December call will not match the results. Similar is the case when the market goes up - an OTM put will have a fast-shifting opportunity as compared to an ITM Call. So theoretically they may seem similar but they have a lot of differences in real-life situations. Hope this clarifies your doubt
For me, this strategy makes little sense. The losses in future / synthetic futures would be more than the profit from put option. Therefore we would be required to bring additional money to fund the losses over and above the profit earned from Long Put. So, we would never get a chance to buy ETF or create fresh long future positions out of the profits earned from Long Put option. Buying future and put equates to Buying call option. In short, we can just buy a long duration call and it would give same payout chart. The losses are fixed and profits are unlimited if market moves upwards. Please let me know if somebody has different understanding as I may have missed something. Always ready to learn !! Vivek ji, you have vast knowledge on this subject and doing excellent service in imparting knowledge to us. I am sure you would have identified the shortcomings in this strategy. Just a thought that if you have raised these points during recording of the f2f, it would give us more clarity. No complain..!!
Important points to learn for me in this video is: 1. Invest in Index through ETF rather than equity 2. Buy aggresively when market corrects and hold it. 3. There is no holy grail strategy in the market other than patience and discipline in investing.
@@amitbhattar789 here how to recover losses when market crash big way ? (as buying fut, selling put & buying call ATM, all that means you are bullish) How we can get profit from put selling when market going down ?
@@uvjoshi07 In the video, Govind ji is asking to buy a long expiry Put to get insured from the falling market. Put selling will be profitable only in bullish market as you identified correctely. The problem is that futures have delta of 50 whereas At the money Put has 25 delta. The Put delta would turn to 50 when it is significantly In the money but by that time, Futures would give significant losses and the profits from Long Put cannot outmatch it. Alternatively, we can buy 2 Put options to match delta of Future but then the insurance cost would double.
@@amitbhattar789 Sir, I once again checked the video they asked to buy call & sale put one lot each Put ITM preferred. Buying fut one lot is bullish, buying call is bullish & selling put is also bullish.
@@uvjoshi07 Sir, you got little confused. In that segment Govind ji was talking about synthetic futures. In regular future contracts, if we buy futures and the market goes down we are required to bring funds for mark to market losses (MTM). This would be troublesome but we can create same future position with the help of options also which would not require to bring funds for MTM losses immediately. Buy Call + Sell Put = Long Future Sell Call + Buy Put = Short Future Left hand side positions are known as synthetic futures. The synthetic futures are then required to be insured by buying long expiry Put. I hope it clarifies the doubt. Though once you understand the above concept, you would feel that the whole idea of creating synthetic futures in the above strategy by Govind ji and then protecting it by Put can simply be acheived by buying a long duration call option as I was saying in my original comment. So, for me his strategy does not make sense.
Govind Bhai is awesome. The Options trading for Growth explained in simple words. The Risk mitigation concept when mkts are down and the comparison with property prices for making us understand was Gr8. I think this will work for Investement ideas for Retirees. Happy investing and knowledge sharing. Thanks to F2F and Vivek for the online session. Ramesh
this strategy doesn't work. I am a customer, joined at 17800, today index has moved up 500 points, I am down 1100 points. Some random "interest" income @ 9% pa is being used to show 12 points as profit in the backend of their company.
Sir...need more clarity in 1 carore calculation...so plz explain it in quantity or lot wise... Otherwise such a beautiful strategy will be massed up unknowingly...plz update the quantity details based on any figure on twitter...plzzz🙏
30 Lakhs for ETF 1 Lot of nifty around 9 Lakh So in 70 lakh we can buy 8 Lots And margin of these lots is around 9 Lakh, which can be adjusted against stocks pledged So total 30 lakh stock + 70 lakh nifty = 1 Crore
How can one do this with one lot? Can we have a step by step video or is it asking for too much? Thanks for the awesome stuff that was shared free, one last doubt as one is buying the Dec put what if say the person passes away then what is the risk could this be shared also? Thanks.
1. Protected leverage. 2. 8-10 % is going to be cost of business. Most suitable for profitable option traders. 3. At least 1 December shall fall in huge bear market. So minimum 5-10 year required for this strategy to work. Or you get the idea when to cover the future and make new trade. March 2020. 4. Don't be carried away, actually returns are less. But if you know what is required for proper implementation then it's free money. 5. We can finance Dec put buy by sell call option of Dec. Covered call. But it will cap our profit on upside. 6. If you have proper trend following system then if market goes down we can cover few future lot and buy only our system again says uptrend. Little risky if you can't identify the trend. Sell high buy low. 7. Best thing about this strategy is that we can buy future with confidence. 8. This strategy will work good if you are efficient in execution and can find cheaper synthetic future otherwise buy a Dec month call. Same results. 9. Better Alternate to this strategy is that make a Dec month debit call spread. Buy ATM( little OTM) Call option sell far OTM call option. Now you can be little innovative with selling far OTM call option. Also bring buy leg up when it become ITM. 10. Enjoy
Vivek ji Just one question..... Do you schedule these videos according to market conditions. Such a smart way of lightning the street of wealth creation! 🙏🏼
Sir one question..... As we all know.. Nifty will not zero.. So agar kohi cheez zero nahi hoga hum logolo malum hota hai.. Toh usko kuyn hedge karna hai? Agar hum log kuch aisa kare... Ki nifty jab jab 20% girta hai usi waqt buy karna hai.. As an example.. That's it... I mean etf.... Please sir i hope you will reply my question... Thank you.
@@ShaileshShah99 we are buying put hedge of December, ok but which future has to be taken, is it of current month or that too of December, grateful for your guidance thanks
For Power Booster Strategy - If we use Synthetic Futures of Dec 23 (Sell Nifty Dec 23 PE, Buy Nifty Dec 23 CE) and then add protection (Buy Nifty Dec 23 PE); the net effect of the Strategy comes as buying Nifty Dec 23 CE at the current strike price. Can anyone help me understand what I missed here?
my advice investment 10 lakhs example invest 90 percent in debt fund keep 10 percent for dec call option buying you will get same roi mention in the video
Sir, broker charges 0.05% per day for overnight positions on the margin we use as collateral i.e 18% per annum on collateral margin. What is the solution?
By far one of the best f2f sessions that I have seen. Wonderful concept explained with great simplicity. Heartfelt thanks to both of you for sharing such knowledge. God bless.
Strategy is good but this strategy can be done with almost No loss and No drawdown very easily instead of all this complex things. Let's understand with an example Considering Nifty @ 18000 on 31st Dec 2021 We just have to buy Nifty 18000 CE Dec 2022 Expiry nothing else(No Put No Future) Now suppose 18000 CE premium is around 1200 points So If we want to buy 1 crore worth of quantity thn we have to buy (1cr/18k) = 555 quantity So our cost of buying this call of 550 quantity ( bcz Nifty lot is in multiple of 50) is 1200* 550 = 660000 Rs Now we have approx 93 lakh rs left with us Now put this 93 lakh in debt fund @ 7.5% per annum and we get approx 6.6 lac return from Debt Funds So now our Risk on Overall 1 crore equity and 93 lakh debt fund portfolio is 6.6 lac - 6.6 lac = 0 And now when Nifty moves above 18000 we will be in profit with no loss and no drawdown of our portfolio Be simple 😀
@@nitingarg94 True that this is simpler but which debt fund gave you 7.5% return in 2021 or in 2022 and how do know that sitting in Jan. Also if Nifty does not hit the strike price for few years your portfolio doesn't grow at all.
@nitingarg Sirji your startegy is perfect zero loss only profit, but you are forgetting one thing when the market will have a steep fall , the put that we buy against the whole position will give you profit , and with that profit you would like be convinced to buy more NIFTY etf there increasing your units but effectively your market value would only reduce by the amount of insurence protection , once the market rises back the extra etf that you purchased at lower rates because of put profit will now give you the returns
@@sagarharish2745thanks sagar for ur kind words, but i think u misunderstood something in my strategy We are not buying any put, we are just buying call......jst visit my channel u will find a detailed presentation there on it
Can you shown it's live market how your doing. Because theoretical is different with) live market. If you show us one lot live market than we can understand it
Sir this strategy will work best only if during your lifetime you get to see a black swan event whose effects are long lasting. In the slide presented at 33:31 if the 2008 and 2009 years are removed this strategy fails. Thus for anyone who started using this strategy from 2010 would be sitting on a pile of losses now.
@@rakeshagarwal7715 You are right when you see things theoretically. But as you understand the same thing will behave differently depending on how one uses it. An option can be used for speculation and the same thing can be used for hedging. Similarly buying a call option and buying a synthetic future with hedging works a whole lot different. To understand this, we need to understand why synthetic future was being used. We bought futures as they were having low financing costs. To avoid the disadvantages of futures we moved to a synthetic future. So the purpose of buying synthetic futures is to reduce our funding cost. Now, when you invest using synthetic future, you have a multiplicity of strikes and multiplicity of expiries. Now, say June synthetic future is cheaper than December future, then simply buying a December call will not match the results. Similar is the case when the market goes up - an OTM put will have a fast-shifting opportunity as compared to an ITM Call. So theoretically they may seem similar but they have a lot of differences in real-life situations.
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Awesome video govind sir & vivek sir, I have one query As discussed in Video we can make synthetic future by Buying Call & Selling Put of same strike price, but for the hedge purpose we need to buy one Put also, So equation comes out to be Option 1 - Buy Future + Buy Put - Max loss 5% Option 2 - Buy Call + Sell Put + Buy Put = Buy only Call so in option 2 if mkt moves above 5% in entire year we will be in profit else loss. So here risk is more than reward So If I say I need to buy only call and continue with the strategy, so am I right or am I missing something
In Option 2...You do Synthetic Futures (Buy CE + Sell PE) on a month to month basis...that is why he referred to the futures carrying cost of 5%. And the Put that you buy for protection - is to be done for December month only. So there is no question of Put Buy and Put Sell cancelling each other. Does that make sense?
@@srtwou In Option 2...You do Synthetic Futures (Buy CE + Sell PE) on a month to month basis...that is why he referred to the futures carrying cost of 5%. And the Put that you buy for protection - is to be done for December month only. So there is no question of Put Buy and Put Sell cancelling each other. Does that make sense?
@@PriyadarshanJoshi makes sense if you are envisaging monthly but it would take much more out of the pocket if considered monthly. Bcoz if Nifty at 17500, CE will be costlier than put
Great idea but needs a lot of clarification with a proper example like which stike price to chosen for buying and selling and of which month for creating synthetic future as the liquidity issue is there with dec expiry options. We also did not understand the idea of collateral margin. Please record one more face to face with Mr. Govind and ask him to clarify the things in more simpler way
Whatever he said can be done with 10 lakhs and rest 90 lakh can be put in debt. Which means he is confusing people by taking a long route and bigger capital.
@@sudhirthakkar yes. Ultimately that is what is happening. Take for example you are buying December month 18000 CE. How will the trade go? You will have limited loss only. Unlimited profit end of year. This is plus point of option buying as well as his strategy. But the bad thing about it is your breakeven point is shifted 500 point up. So your real breakeven will be 18500.
Need more clarification on the strategy....it is very usefull if we get practical explanation by considering 1 lot of nifty or say with 10lakh worth of capital..... 🙏🏻 It has been seen from comments there are lots of doubt among people regarding the strategy...
Great learning...and thanks a lot for the valuable wisdom...by Govind Sir and Vivek Sir... If we consider a Hypothetical situation where Nifty Index stays flat for years without moving anywhere then what will be the course of action as the premium cost will be incurred YOY basis each year...( however the possibility is too less).. But thanks for the explanation of the concept...
Kudos to vivek ji for bringing such gems 💎 of the market. Retailers need to understand that making money from the market needs long term planning. We need to use derivatives for our benefit and hedging the portfolio. I guess this is what the institutions do.
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Dear Govind sir and Vivek sir Indeed a wonderful webinar. Here, additionally I would like to know that as we have the strategies to buy future by hedging it with options. If we do that what would be the difference in this scenario. Regards
there was one gentleman in IndIa exchange place. , i used call him library uncle. he used to say me - beta eik nifty index etf buy karoge toh ek gold etf bhi le lena.
This is as good as buying a long term CE.. only thing is that it becomes difficult to sell it as a product. Also, not sure how much liquid a long term call would be. But logically thinking it is nothing but buying option alongside blocking your 7-8 lakhs in nifty bees.
Exactly invest 1 Cr in rbi bonds and buy call instead of all this gymnastics. If the market does not move for 4 years either direction..you would be down 20 percent. Am surprised that someone like Vivek is not asking this question.
Yeah.. in your case, even if the market goes down your quantity would always be the same whereas, here PE profit can be invested back and gett a better average price.
@@shukbindersingh9875 if market goes down from 17k to 13k, we would be buying 13000 ATM CE. Automatically your average price will be taken care of. We would be losing only CE amount in case of loss while entire capital will continue to earn interest from wherever it is invested
I have few doubts. Please clarify. 1. Buying future / synthetic future will have unlimited loss when market crashes which will be capped by the put option buy. Means put option will just limit downside risk, how will it give extra money to buy index at lower levels ? 2. Is Buying monthly synthetic futures and then rolling it every month better or Buying December month synthetic futures better ? 3. Market crashed during corona in March and recovered by December so how to identify profit booking and reentry ? Or will we be in this trade throughout the 10-15 years?
Strategy is good but this strategy can be done with almost No loss and No drawdown very easily instead of all this complex things. Let's understand with an example Considering Nifty @ 18000 on 31st Dec 2021 We just have to buy Nifty 18000 CE Dec 2022 Expiry nothing else(No Put No Future) Now suppose 18000 CE premium is around 1200 points So If we want to buy 1 crore worth of quantity thn we have to buy (1cr/18k) = 555 quantity So our cost of buying this call of 550 quantity ( bcz Nifty lot is in multiple of 50) is 1200* 550 = 660000 Rs Now we have approx 93 lakh rs left with us Now put this 93 lakh in debt fund @ 7.5% per annum and we get approx 6.6 lac return from Debt Funds So now our Risk on Overall 1 crore equity and 93 lakh debt fund portfolio is 6.6 lac - 6.6 lac = 0 And now when Nifty moves above 18000 we will be in profit with no loss and no drawdown of our portfolio Be simple 😀
Awesome mind blowing learning, fantastic premium contents 👌👌👌👍👍👍👍🤗🤗🤗💐💐💐💝💝💝💕💕💕💕💖💖♥️♥️♥️♥️💞💞💞💞💞👏👏👏👏👏👏 Amazing really amazing 🙋🏻♂️🙋🏻♂️🙋🏻♂️🙋🏻♂️👏👏👏👏👏💞 But........ After interval 48:00 Vivek sir bor ho gaye ho esa lag raha tha. Vo bich bich me apne NAKHUN (nail) kyo chabane lag jate he 🤔🤔🤔🤔🤔🤔🤔
Dear Vivek Sir, This is one of the best face face discussion among all the Videos you have shared...Thanks Govindji for such a wonderful presentation. 👍🙏🏻
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Strategy is good but this strategy can be done with almost No loss and No drawdown very easily instead of all this complex things. Let's understand with an example Considering Nifty @ 18000 on 31st Dec 2021 Now we just have to buy Nifty 18000 CE Dec 2022 Expiry Now suppose 18000 CE premium is around 1200 points So If we want to buy 1 crore worth of quantity thn we have to buy (1cr/18k) = 555 quantity So our cost of buying this call of 550 quantity ( bcz Nifty lot is in multiple of 50) is 1200* 550 = 660000 Rs Now we have approx 93 lakh rs left with us Now put this 93 lakh in debt fund @ 7% per annum and we get approx 6.5 lac return from Debt Funds So now our Risk on Overall 1 crore equity and 93 lakh debt fund portfolio is 6.6lac - 6.5 lac = 10k only And now when Nifty moves above 18000 we will be in profit with no loss and no drawdown of our portfolio Be simple 😀
@@sandippatel3680 its depend on you.....where u will invest remaining 93 lakh rs if u invest whole amount in bonds thn u will not face drawdown period.....but if u invest whole amount in niftybees thn u may face drawdown in niftybees In my view 60 lakh niftybees and 33 lakh in FD @ 6% is a better option to invest rather than bonds
I am confused about why futures require higher mtm? - because we have already bought long term dated protection. Then how there is difference between SYNTHETIC FUTURE and NORMAL FUTURE POSITION? PLEASE EXPLAIN
34:25 Only 19% CAGR return, any strategy ETF like ALPHA, SMALLCAP or Index ETFs like Midcap 100 (mom100) or Smallcap 250 (hdfcsml250) or hybrid aggressive funds like Quant Absolute fund (19%) or ICICI Prudential Equity & Debt Fund (18.77%) would give better returns without brokerage and taxation headache. This is just trying to be mutual fund.
👏🏻👏🏻 I am in market since last three years, but this knowledge is really eye opener. Govind ji, the way you elaborate your awesome strategy very impressive. Keep it up Vivek bhai. 👍👍
Strategy is good but this strategy can be done with almost No loss and No drawdown very easily instead of all this complex things. Let's understand with an example Considering Nifty @ 18000 on 31st Dec 2021 Now we just have to buy Nifty 18000 CE Dec 2022 Expiry Now suppose 18000 CE premium is around 1200 points So If we want to buy 1 crore worth of quantity thn we have to buy (1cr/18k) = 555 quantity So our cost of buying this call of 550 quantity ( bcz Nifty lot is in multiple of 50) is 1200* 550 = 660000 Rs Now we have approx 93 lakh rs left with us Now put this 93 lakh in debt fund @ 7% per annum and we get approx 6.5 lac return from Debt Funds So now our Risk on Overall 1 crore equity and 93 lakh debt fund portfolio is 6.6lac - 6.5 lac = 10k only And now when Nifty moves above 18000 we will be in profit with no loss and no drawdown of our portfolio Be simple 😀
I am a 2003 batch CA and an avid listener of your webcasts since January 2022. So much to learn from your guests. Wish I should have started earlier! Thanks a lot, Vivek ji.
For discussion/comments going on this video, here is my initial thought. Today nifty close is 17833 and 17800 Sep CE is Rs 297. Even we exclude intrinsic value it comes to 260. So for a full month premium would be say rs 300. For 2 lot nifty i.e. 100 qty total premium for one year would be 300x100x12 = 3,60,000/- . Suppose market gone some 1000 points up then 2000 points down and 1000 points again up in next one year closes at the same place our total loss/cost would be rs.3.6 lacs whereas in this described lesson with 18000 Pe/17500 PE Dec 23 and roll over cost, total cost/loss would be 1.2 lacs. Of course there is a need to calculate other scenario also. In sum i understand that it is a strategy for moderate gain when market moves higher, for moderate loss when market moves lower with stress on hedge which will benefit when market crashes like 2008 or 2020. View with calculation in different scenarios are expected.
Further managing through only call shall be beneficial when one actively trades, which in this case also can be done simultaneously. So this strategy will act as one level up for diversification.
He is saying u will be protected after 5 % cut . So why not to simply buy edges %5 % lower in weekly basis in almost 1 RS both sides available every 48 times a year . Why to give such a large premium den . His intention is only to save future after 5% but is ready to give easily 5% premium for a year which is the only profit for many writers . He is feared of Black swan . He should be . But there are more better ways to protect the future den to do long term contracts .
Other than grossly underestimating ATM put cost, there's a basic flaw in the computation ( pl check my comment) and the difference isn't trivial. The speaker conveniently glosses over it
Spot on. I was about to say the same. Even in a crash year like 2020. If we hold outs till the end the. Again the entire put premium will be lost. Ideally we should have cashed out the put on March 23. And bought fresh ATM puts at low price. But we donno the bottom. So the strategy needs some rules like if market crashes more than 10% then we need to cash out the put etc. otherwise If market goes down and then recovers the entire premium is waste. Also.
Sir 30 lakhs ke ETF purcjase krrke....jo collateral margin milega by using that margin....how to buy Futures worth of 70 Lakhs..?? Suppose collateral margin on 30 Lakhs is 27 lakhs....i.e.(90% of 30Lakhs)
i watched this twice and got really impressed with the simplicity and potential of creating wealth from the concept. It would be really nice if it can be demonstrated exactly which option combinations are to be entered into so that risk is confined to around 5 %. For eg. if we enter into a synthetic future of say 18000 for dec (current margin req. for 1 lot is around 1.5 L) and uprfront investment for call buy is 31 K. so I need to consider 5% of which value ... kindly clarify for my silly doubt. thanks once again.
Hi Vipul, liked the entire strategy on paper. But there are few questions and confusions when it comes to put it into actual trades. Would have been great if he would have given examples with actual strikes and actual trades.
Strategy is good but this strategy can be done with almost No loss and No drawdown very easily instead of all this complex things. Let's understand with an example Considering Nifty @ 18000 on 31st Dec 2021 We just have to buy Nifty 18000 CE Dec 2022 Expiry nothing else(No Put No Future) Now suppose 18000 CE premium is around 1200 points So If we want to buy 1 crore worth of quantity thn we have to buy (1cr/18k) = 555 quantity So our cost of buying this call of 550 quantity ( bcz Nifty lot is in multiple of 50) is 1200* 550 = 660000 Rs Now we have approx 93 lakh rs left with us Now put this 93 lakh in debt fund @ 7.5% per annum and we get approx 6.6 lac return from Debt Funds So now our Risk on Overall 1 crore equity and 93 lakh debt fund portfolio is 6.6 lac - 6.6 lac = 0 And now when Nifty moves above 18000 we will be in profit with no loss and no drawdown of our portfolio Be simple 😀
@@nitingarg94 Hi Nitin, i have one doubt, if market move down and closes the year say at 16000,CE will expire worthless and our ETF will show the drawdown no?
Sir i want to ask that, in your ppt you said when market is down by 30% our portfolio becomes 80 lac from 1.2 crores. And our premium paid is 6 lacs. Now the point is our portfolio is down by 40 lacs (-30%) but at the same time our premium is up by 7x. Is this possible? Investment down by 30% Premium up by 7 times Pls clarify sir.
Hi, We appreciate your comment and we would love to hear more from you. However, we also have more such opportunities for our learners, so that they can get more exposure. You can have a look here- sedg.in/vphngz35
@@finideas Excellent learning sir... tks... A small query Sir...what i didn't understand is ~ 46:33 min u said to buy put at 6500 and 6000 both. Why? only one put bought @ 6500 could be enough for hedging na?
@@setgautam The Nifty was somewhere 6300.....so logically one should go with 6300PE (ATM) but since that might not be liquid so better is to go with 500 multiple strikes. So going with 6500 or 6000 is ok when you are working with single lot, however if you are working with multiple lots better is to go with both 50-50% (by this way you are actually going with ATM strike only) This is my understanding......hope this helps
If the expenses come to 8.5%( 5% bought put and 3.5% towards carry forward cost), it means unless the index goes up by more than 8.5% , the trade won't be in profit. Right?
When you Invest money in Equity or MF, you invest full money. Here you save interest on 70% funds so you should consider the interest savings too. The annual cost will reach to 2 to 4% as per your earnings on rest 70% funds.
@@finideas True. Thanks for throwing some light. Further, I require one more clarification. Let us say,we are buying December nearest rounded off ATM put for protection( In the present case 18000 strike). Should we buy December call and sell put , say of 17800 strike, to create synthetic futures or should we settle for say October? What about slightly different strikes to make sure that BE is less than the actual futures price?
Easily one of the best investing discussions I have seen. The clarity of thought and the simplification of the process is amazing. Kudos to you for putting this together👏👏
Hello Respected Sirs, Thank you for the wonderful idea. I have a couple of questions to better my understanding 1. By going long in Futures and buying protection(PUT) will make sure that losses in futures will be compensated by gain in Put. However in the example it was explained that when market goes from 12K to 8K the portfolio value will remain 12K and that the equity units will increase. In my understanding, Equity value would be 80Lakhs. However, if one invests the entire amount in ETF then equity units would increase but reducing the costs through safer instruments would not be possible 2. Similarly in synthetic futures, the put buy and protection put would negate each other leading me to believe that wouldn't just buying the call give a similar(not exactly same) ROI Looking forward to your response. Again many thanks for the strategy
Thanks Vivekji and Govindji , it was outstanding session .Govindji has really opened up eyes that too in a simple way. I really have no words to express gratitude. Looking forward for more sessions with him.
Hi, We are glad you enjoyed our video. We will surely come up with more! However, we also have more such opportunities for our learners, so that they can get more exposure. You can have a look here- sedg.in/vphngz35
Strategy is good but this strategy can be done with almost No loss and No drawdown very easily instead of all this complex things. Let's understand with an example Considering Nifty @ 18000 on 31st Dec 2021 Now we just have to buy Nifty 18000 CE Dec 2022 Expiry Now suppose 18000 CE premium is around 1200 points So If we want to buy 1 crore worth of quantity thn we have to buy (1cr/18k) = 555 quantity So our cost of buying this call of 550 quantity ( bcz Nifty lot is in multiple of 50) is 1200* 550 = 660000 Rs Now we have approx 93 lakh rs left with us Now put this 93 lakh in debt fund @ 7% per annum and we get approx 6.5 lac return from Debt Funds So now our Risk on Overall 1 crore equity and 93 lakh debt fund portfolio is 6.6lac - 6.5 lac = 10k only And now when Nifty moves above 18000 we will be in profit with no loss and no drawdown of our portfolio Be simple 😀
@@expirytrader5802 I think u misunderstood something Jst read my startegy again Infact in downtrend u can generate more returns Still if u hv an query visit my channel
He said that he will use 30 lakhs for investing in Nifty ETF and rest 70 lakhs will be invested in debt-funds. and then he will pledge Nifty ETF to buy 70 Lakhs of Nifty Futures. This makes total of 1 Crore worth of Nifty and 70 lakhs of debt-funds by using 1 crore of capital. We can just buy 1 Crore worth of Nifty Futures for just 17 lakhs. If we buy a Put option to hedge, then the margin reduces to around 5 lakhs (you can check with any margin calculator) So ultimately, You just have to put 5 lakhs every year from your 1 crore to invest in nifty which is only 5% of your capital. You may loose the whole 5 lakhs, Or you will gain how much ever nifty moves up. Unlimited profit and limited loss of 5% every year. Even after using 5 lakhs, the remaining 95 lakhs can be put in FD/Debt to get interest which can be used to pay taxes and compensate losses. We can do the same thing he said but without all the confusion plus you can put more into debt making it safer. How? Just buy 11 lots of nifty futures and hedge it with 11 lots of ATM PE. This needs a margin of around 5 lakhs only.
I had a bad experience. They have a strong marketing campaign. The rest is actually a hope and prayer based strategy. Theta gainer , Option flavours provided many reliable strategy and those are free.
Strategy is good but this strategy can be done with almost No loss and No drawdown very easily instead of all this complex things. Let's understand with an example Considering Nifty @ 18000 on 31st Dec 2021 We just have to buy Nifty 18000 CE Dec 2022 Expiry nothing else(No Put No Future) Now suppose 18000 CE premium is around 1200 points So If we want to buy 1 crore worth of quantity thn we have to buy (1cr/18k) = 555 quantity So our cost of buying this call of 550 quantity ( bcz Nifty lot is in multiple of 50) is 1200* 550 = 660000 Rs Now we have approx 93 lakh rs left with us Now put this 93 lakh in debt fund @ 7.5% per annum and we get approx 6.6 lac return from Debt Funds So now our Risk on Overall 1 crore equity and 93 lakh debt fund portfolio is 6.6 lac - 6.6 lac = 0 And now when Nifty moves above 18000 we will be in profit with no loss and no drawdown of our portfolio Be simple 😀
@@nitingarg94 as I told mathematically it is very attractive. There is no flaw in the concept as per back tested data. But eventually it is a "hope based strategy" so it looks very good. I experienced it so I know the issues ..😂
@@arkobabi No its not hope based strategy ,its practically 100% possible Tell me one thing that can't be executed in this Infact the way i told it.....it is with 0% risk with no hedging and financial cost If u hv any further query...... Thn comment me on my RU-vid channel video......i will contact you and explain everything which u want
Wow,,it’s an eye opener. Never thought the wealth growth along with its preservation was explained this clearly. It’s a bit late for me (57 years old) but will direct my children and nephews towards this idea. Thank you both for taking time to make a Such a lovely video. Both of you earned good karma. Ramesh
Instead .. if one buys nifty ETF with 90% of money & keeps 10% balance as reserve for cost of 1 year away put- protection .. and continues to roll over put year on year ... Assuming 1 big mkt crash in 4/5 yrs with you loss in Nifty of 25% put protection cost will be recovered .. & one would safely create wealth @ Nifty growth rate # CAGR 16% over long period .. !!
As per the margin rule, we can use only 50% colleteral to trade in FnO and the rest 50% has to be cash. So how can we buy 70 lacs worth of futures from 30 lacs etf colleteral?
Hi, We appreciate your comment and we would love to hear more from you. However, we also have more such opportunities for our learners, so that they can get more exposure. You can have a look here- sedg.in/vphngz35
bhai thoda aur study karo. call option buy toh karke dekho. Aur jab tum synthetic future banaoge toh sab samjh aa jayega. put se put kat jageya aur tum kewal call option buyer ho.
@@MrVikasingh1210 if you create insurance and synthetic future at same strike and same expiry then it will nullifying puts , but at different expiry it will work as per strategy .
@@prasadkale232 Sir aap opstra mein December month ka CE option buy karo. Then calculate the price of doing the future forwarding( approx 5%) aapko December ka call option bhi 5% premium par milega. Request you to do the back testing you will understand. Sir below this you can read if you want else..... 1. Protected leverage. 2. 8-10 % is going to be cost of business. Most suitable for profitable option traders. 3. At least 1 December shall fall in huge bear market. So minimum 5-10 year required for this strategy to work. Or you get the idea when to cover the future and make new trade. March 2020. 4. Don't be carried away, actually returns are less. But if you know what is required for proper implementation then it's free money. 5. We can finance Dec put buy by sell call option of Dec. Covered call. But it will cap our profit on upside. 6. If you have proper trend following system then if market goes down we can cover few future lot and buy only our system again says uptrend. Little risky if you can't identify the trend. Sell high buy low. 7. Best thing about this strategy is that we can buy future with confidence. 8. This strategy will work good if you are efficient in execution and can find cheaper synthetic future otherwise buy a Dec month call. Same results. 9. Better Alternate to this strategy is that make a Dec month debit call spread. Buy ATM( little OTM) Call option sell far OTM call option. Now you can be little innovative with selling far OTM call option. Also bring buy leg up when it become ITM. 10. Enjoy
Sir. Now if I want to buy put for protection should I buy 21000 put or 20000 put. And dec 2024 or 2025 which is better. Because both are liquid and 2025 is looking cheaper
Hi, instead of buying future and sell PE, why can't just buy CE, it has almost similar payoff diagram and benefit of this is to put around 80L in debit fund instead of 70L. Or to save carry forward cost, sell very far ITM PE instead of buy future.
In future, if market is at same point, you loose nothing, but if you buy 2 CE lots, you will loose whole premium, but if you buy CE and sell pe, you will loose nothing... Also check delta... It should be 1, which is not in this case....
Just buy premium amount of call option.. Say if portfolio is 1cr then 5% premium for downside risk cover.. Will allocate 95 lacs to safe funds and buy call option of December month worth of Rs. 5 lacs.. It serve all purpose. Downside risk is 5 lacs, if market won't move then risk is 5 lacs.. But if market goes up.. It will also paid us well.. We can buy good quantity with 5 lacs.. Is this work or I m missing something here????.
Dear Vivek ji you are bringing out gems of investment world to the fore, your face to face is a revolutionary concept, one of the best episode for long term investors . Thank you very much for this interaction . Thanks also to Govind Jhawar ji for explaining the concept so lucidly . Hats off to both of you.
I had a doubt. We are doing monthly synthetic futures. If nifty goes down for 4 months, we need to pay the loss every month. Yes ofcourse MTM will not occur on daily basis, but we need to pay it on monthly basis if nifty comes down. Because protection put will give us profit after an year. But we need to pay on monthly basis if nifty goes down. Please correct me if I am wrong
This is wonderfull session. I wish it adds to your sukarma. Bow to you for bringing such gems of Stock Market for public at no cost. More power to you, Vivek Bhai!
Koi mujhe thoda bataye suppose main 1l ka future Aug ke mahine main Nifty ka synthetic future kiya 1 lot and Dec ka hi PE buy kiya at the money @ 600. If market is within the range then Nifty will be no loss and profit. However, PE price will be going to Zero na. At that time our loss will be 30000 na. How the loss will be 5% of our total capital. Can any one guide me. Yadi main Bond main bhi invest karunga to bhi mujhe 8000-10k maximum milega na but baki to mera loss hoga na
One of the best practical video.. have gone through many options video but this guy nailed it with simplicity.. loved it and will implement it with a covered call so no cost benefit or slight profit
Strategy is good but this strategy can be done with almost No loss and No drawdown very easily instead of all this complex things. Let's understand with an example Considering Nifty @ 18000 on 31st Dec 2021 Now we just have to buy Nifty 18000 CE Dec 2022 Expiry Now suppose 18000 CE premium is around 1200 points So If we want to buy 1 crore worth of quantity thn we have to buy (1cr/18k) = 555 quantity So our cost of buying this call of 550 quantity ( bcz Nifty lot is in multiple of 50) is 1200* 550 = 660000 Rs Now we have approx 93 lakh rs left with us Now put this 93 lakh in debt fund @ 7% per annum and we get approx 6.5 lac return from Debt Funds So now our Risk on Overall 1 crore equity and 93 lakh debt fund portfolio is 6.6lac - 6.5 lac = 10k only And now when Nifty moves above 18000 we will be in profit with no loss and no drawdown of our portfolio Be simple 😀
@@nitingarg94 just one catch here your equity exposure here isn't 1 crore its 50 lakh. An ATM option has a delta of 0.5. So for 10K risk you're putting up 1 crore of capital each year where if the Market doesn't move or goes down you earn basically nothing but if it goes up, you earn on your 50 lakhs. So if market goes up 15 percent your portfolio goes up 7.5 percent. Plus all your gain would be taxed short term. no free lunch in the markets.
