Creating Wealth using Nifty and Long term Options contracts !!
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- Опубликовано: 10 июн 2024
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Watch Mr. Vivek Bajaj, co-founder of StockEdge, and Elearnmarkets talk all about Trading with Mr. Govind Jhawar.
00:00- Introduction
03:06- Speaker's background
07:03- Basic needs of an investor
08:20- Nifty Index
18:40- Past 19 year's performance
21:16- Relax Strategy
28:00- Basic Strategy
29:26- Power Booster Strategy
32:50- Index Long-Term Strategy
34:20- Risk return Profile
37:55- ILTS performance since 2014
39:44- Live Trade
43:38- Excel sheet explanation
49:50- Synthetic futures
57:55- Wrap up
Our speaker, Mr. Govind Jhawar is a Chartered Accountant, Certified Treasury Manager, and SEBI Approved Investment Advisor. He has 21 Years of experience in the Capital, Currency & Derivatives Market. He is also the founder of Finideas, which is a Company with a good Wealth Management profile and with Solid Technology and Education Edge in the Financial Market.
To watch more videos on investing, you can have a look at our playlist- bit.ly/3JH08ju
In this video, our speaker will talk about the strategy that allows him long-term wealth creation in the financial sector. He will discuss his techniques and strategy that can provide a way to get maximum wealth through the stock market and financial investments.
It will begin with the nifty index that will show the market capitalization of several big cap companies in the industry. The equity shares are also explained for more clarity and give a background of the whole strategy.
He will talk about 3 strategies that he has specifically created for maximum wealth generation for his investments, which will be a revelation for the learners. Before this, he will also talk about the past 19 year's Index performance.
The index long-term strategy is a low-risk and high-return strategy that can be used in Nifty index, which has big capital companies. Options contracts are also a common method of generating long-term wealth in the stock market.
Watch this video to know more!
Find the PPT here- bit.ly/3AbmiXR
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Webinars by Mr. Govind Jhawar on Elearnmarkets- sedg.in/mef4q9dn
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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
Gold. Pure Gold!! Thank you Vivek for featuring such gems! Thanks Govind for sharing this powerful method of wealth creation in an open forum! God bless both. May elearnmarkets succeed and prosper!
Felt like i attended this session only for few seconds, One should be blessed to gain knowledge from two gurus pouring their finance knowledge without any hindrance, hesitation .God bless you both for making such content available to public.
I am very glad that when I entered in market I found Vivek Ji and Elearnmarket. Thank you Vivek Ji.
One of the best session on your channel so far. What a mind blowing strategy and explained so much in detail. thank you so much.
Govind ji you are an absolute gem of a person.. Great donation of wisdom worth lacs & crores
बहुत ही अच्छा थँक्यू विवेक बजाज अँड all team
This is one video that i've watched at least 20times since you aired it.
Thank you very much for such wonderful teaching.
You had watch 20 time did you tried it out . Itried to buy December option but my broker don't allow it . Kotak neo is my broker . Any help
Very unique and fabulous F2F with simple practical examples...
Thank you so much for providing such a valuable content.
Hi,
Keep watching our videos and also share with your friends and family.
You can also check our website for more updates on the stock market- www.elearnmarkets.com/
This is beyond brilliant. Fantastic concept explained so well.
The best of best F2F Interviews I have seen so far, such a beautiful and great strategy to build Wealth.
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.
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👏👏
Excellent session ! Great tutor Govid, sir and thanks to Vivek sir.
Thank you Govind Ji and Vivek Ji for such an wonderful video with so much clarity.
Astonishing Session ❤️
Thank you sir 🙏🏻🙏🏻
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.
Hi,
We appreciate your positive response.
Also, we are coming up with more such learning experiences for our learners, so that they can gain more knowledge. You can have a look here- sedg.in/jv8qkf49
Wow! Simple calculation and powerful results!
It's a eye opening concept 👌🏻
Memorable session 👌🏻
Thank you 🙏
This session was out of the world. Each and every words were pure gems. Grateful to both of you.
sir, big salute to you, you are doing a very good job. Also today's guest is full of knowledge. liked the show very much.
Hi,
Thank you for liking the video. Do share with friends and family. Also to help you grow in the world of financial markets we have various webinars- sedg.in/jv8qkf49
Excellent, hats off to both of you for your dedication 🙏
Excellent !!! Thanks a lot to both of you.
Real eye opener, thanks to both of you
which eye of yours has opened
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! 🙏🏼
One of the best learning video hats off to both of them
Brilliant guest! Thank you
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!
this is not vedio this is ocean of knowledge this is amazing session thNK YOU SO MUCH FOR THIS TYPE OF AMAZING ANAYLISIS
This video blows my mind....will go deep in this...Thank you so much Elearmarkets..!!!!
Great, very informative , thank you vivek bajaj sir
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.
Thank you so much Sanjive Arora. We really appreciate your honest feedback 😊
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 👌👌😀👍
Thank you. We appriciate your comment.
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
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.
Very excellent video sir...thanks both of you sir
Super strategy ...one of the best face 2 face talk..
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
@@nitingarg94
Your channel what is that called can you share the link
👏🏻👏🏻 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.
👍👍
Your comment is pricious to us. Thank you.
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 hi, elaborate on a scenario when the nifty is at say 16800 on 31dec2022
Bohot Jabardast..
Din ka Aant Gyank k Saath..
My sincere appreciation to both of your for this great Karma. 🙇
What a beautiful strategy and how exhaustively you have explained. Thanks to both of you for sharing this with us. A great learning session.
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
Excellet ideas explained very well, thanks Govind & Vivek
Thank you very much for your knowledge sharing....,
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...
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. 👍🙏🏻
Hi,
Keep watching our videos and also share with your friends and family.
You can also check our website for more updates on the stock market- www.elearnmarkets.com/
Every f2f is wonderful✨😍
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 niftybees buy nahi karna hai ?
@@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
Fantastic speaker Govindji
this is pure gold, thank you very very much
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
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
Amazed with simplicity of pure gold content.
बस नमन ही कर सकता हूँ आप दोनों को। मेरी तो यही फाइनेंशियल पाठ शाला है।
Pure gold content!! Spreading such knowledge to retailers for free is commendable.❤
Thank you for the comment.
Just go and buy the call of December...u will get exactly the same result which govindji taught...u can check
@@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.
@@rakeshagarwal7715 if u purchase a call ,it is OK , if market goes up. But there is no protection ,if it goes down.
Bhaiya 10% is cost of business if you are active trader.
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
Absolutely correct 👍
Difference might be because you don't pay in cash or just 50% of the prem. and balance is utilized from collaterals.
@@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 ?
Shukriya Govindji and Vivek ji.......saadar naman......Aajkal so-called market guru apni strategy 10--20 hajar mai sale kar rahe hai ...Lekin aapne itni badiya strategy free of cost open kar di....Allah aapko khush rakhe ...Aamin
Wow ,wonderful ,that's grate think share by both of you
Thanks you both of you
What a session seriously i am amazed hats off to vivek ji and his guest ❤️
Thank you.
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
One of the best F2F sessions . Thanks both of you
Best of the best. Simply amazing....
Great learning. Unbelievable mastery on the subject.
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 😀
@@nitingarg94 what ever you are saying will not make money in down trend
@@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
@@nitingarg94 it seems you are not concerned about safety.
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.
What a class...... Salute to u sir.. This type of information share with us.
Very much Interesting topic.
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 😀
Nitinji, you didn't add selling put calculation, isn't it needed?
@@sangitasojitra5427 bcz we r not selling any put in this.....we r just buying call nothing else
@@nitingarg94 Nitin could you please explain more did not understand properly if market down what will happen
@@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.
I think this is the most valuable content for retailers on e-learn platform. Thank you Vivek ji for bringing such type of content. Real jem for retail trader's
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 Really is this so simple, hard to believe 🙂
@@laxsri yeah its simple but hard to believe bcz of our mindsets
@@nitingarg94 You are damn right. A simple thing has been complicated.
One caveat.
F&O should be used as a minimum due to taxation.
For example at 30% tax bracket, the protection should be 42% higher to compensate the portfolio loss fully. This will increase the put cost from 5% to 7%. This 2% compounding loss over long term of 20 years will be devastating.
If we use synthetic futures all.the gains will be 30%less. On a good year 15% return will reduce to 9.5%.
I feel the best choice is a balance of investing in a portfolio and take a long term insurance of ATM put for 3 years at 7% cost including 30% tax. This is cheap. Buy and forget. At 2.5 % cost per year you have a peace of mind for 3 years. If there is a disaster in the country you can cash out at 93% of your portfolio. If not then at 15% compounding you will get a 40% growth in nifty portfolio.
As a variation, we can intead of nifty have a large cap stock portfolio giving better return. Buy a nifty equivalent unit. Due high portfolio beta, the nifty units required will be higher...Approx 3% per year.
So simple solution is 91% money in portfolio. 9 % towards cost of option. Forget for 3 years.
@@ghosejoy This strategy won't work with large capital bcz of liquidity issues in yearly expiries.....So no need to worry about 42% taxes......if still hv any query jst visit my Profile by clicking on DP , I shared a detailed presentation there on this strategy
Marvellous simply
Thank you very much vivek sir for this knowledge you gave us and continuously giving.
Had heard and read a lot about Hedging but not with this simplicity. Hats off to you both!!
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 breakeven in this strategy will be 19200, not 18000?
@@harishpn4396 breakeven is 18000
Bcz 1200 point premium loss will be covered from interest received from balance 93 lakh funds
@@nitingarg94 with this strategy we won't be able to take advantage of buying more units of the etf at lower levels which would make huge difference when the upmove will come
@@shashankkala3437 u can take full advantage on lower prices......plz read my strategy twice
If still u hv any issue visit my channel...... I shared a detailed presentation there
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
Same doubt from my side as well. Please clarify
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 in video he showed synthetic future for long term...Dec 22.
@@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
Respected Sir's
Fabulous. Thanks Vivek ji & Govind ji
For sharing amazing knowledge.
Esteemed Regards. 🙏 🙏🙏
SUPERB ANALYSIS SIR THANKS FOR YOUR TEACHING AND BLESSINGS AND HELP 👏
Great content and Knowledge Govind Ji. Thanks Vivek Ji for bringing such persons near to retail participants. Future Hedge with Insurance leads you to Great wealth..
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 your idea is good , do you mean to say 550/50 = 11 lots . If you plan to invest in entire balance 93% in debt / bonds then you need not waste this 7 % as your capital is already protected. so in my opinion this is useful only when you have exposure to capital market where the capital is stake at any point of time.
@@srinimd I think u misunderstood something
Yeah we buy Nifty call 550 (11 lot) quantities worth of 1 crore
So tell me how my capital is protected if market closes below 18000 at the year end
In that case my entire premium of 11 lots around 6-7 lakhs will be zero.....so to cover that loss i suggested put balance fund into safe GOVT/RBI bonds where capital is never on risk
We can also put this balance fund in Nifty ETF for CAGR 12-14% but thn we hv to finance next year premium of 11 lot from our own if market closes below our levels at the end of year
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.
what an insight, face to face, amazing!!!
this is one of the best sessions...thank you
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?
Exactly what I also pondered on!! Would be great if vivekji or govindji can throw some light here
Mai bhi isi bat pe confuse hu
Excellent f2f with Govind sir with calculated risks easy to understand format.. felt it was "Sambit Patras" younger brother talking on investment
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
@@9783633388 u r right Rohit
@@9783633388 buying hedge in December is ok but which month future or ATM call & put one has to take. Please clarify, thanks
Amazing face to face yet again,you bring only diamonds for us,thanks a ton for this outstanding video
Mind blown away. Thank you vivekji for this😍
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?
This must be replied
Change broker... new age broking firms Don't charge
@@jeevanreddy6186 please mention some?
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
yes example... is the trick here ... theory tho sab bote hai...
I analyzed his strategy with strategy builder. His strategy is nothing but yearly atm option buying. Do you want me to explain??
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.
@@faheemsameer1598 You mean call option buying?
@@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.
Amazing Govind Ji for the Presentation
Very informative, honest and crystal clear talk.
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
One of THE best face to face, Conceptual clarity and delivery of the content is amazing, Learning from this face 2 face is worth 100 good books.
Thanks to both of you.
Thank you for the comment.
Govindji ,really you have given wonderful planning for investment, Hat's off vivekji for choosing the gem of the market.
Mind blowing Learnings 👍 He is too good 🙏 Thanks a lot
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
That's why I think we need to keep 30% Niftybee in collateral
Option buy ka premium khatam hoga cash kyu bharna hoga
Instead do call selling.
Same confusion here too
When the market falls won't you rollover to lower strike with lower premium? Because overall synthetic future cost would come down as well?
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?
@@mathewnv9630 No need to buy ETF here. Only call buy.
Thanku sir very much aapne programme ko hindi me dil se dhanaywad
The great valuable investment video ever seen..
Thank you❤🌹🙏 Both of you sir..
I can guaranty this is excellent strategy ,
But Didn't understand ,
Though I'll watch this few times more 😂😂😂
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🙏
I can explain you all the figures in simple manner
Jst visit my video on my channel to connect me
Did anyone answer this??
no I think
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
@@POFPFNB plus five lacs for buying put options as protection
awesome video....very different very informative very knowledgeable
Both are great , thanks
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
It is better to
-use long call instead of puts plus synthetic future.
-roll options early and save theta cost.
True. That's a better way
Yup
Excellent information
What a great strategy and knowledge shared..tq vivek sir.