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Hedging Strategy - Any thoughts.

Discussion in 'Technical Analysis' started by kamat79, Jan 3, 2013.

  1. kamat79

    kamat79 New Member

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    Hi All,

    WISHING YOU A VERY HAPPY NEW YEAR!! I must thank Shabbir sir for making such knowledgeable platform available.

    BTW, one Q -
    Has anyone used the below hedging strategy? Below are the details -

    Suppose You hold 2000 shares of NTPC priced at Rs. 159/-
    You also buy a put of strike price Rs. 160/- priced at Rs. 3.80/- (Total Premium paid : Rs. 7,600 /-)

    We hold the shares like NTPC for the long term. So if we buy a put, it's kind of hedging so we earn if the share falls as well.

    Any thoughts please? Also kindly share if you know best working strategy for particular shares.

    Thanks!
     
    kamat79, Jan 3, 2013
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  2. shabbir

    shabbir Administrator Staff Member

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    I am not a fond of hedging and I prefer to be using stop loss over hedging because hedging means you are not sure of the price movement of the stock and in such scenarios either I go for stop loss or may be no trade zone.
     
    shabbir, Jan 3, 2013
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  3. verenmitter2001

    verenmitter2001 Member

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    Yes you are right Shabbir but in case our analysis went wrong is it advisable to go for hedge??
    Also I am interested in OPTIONS any suggestion on it as I am trying to imply my tech analysis on underlysing stock involved and taking positions. But not very sure how to go about as time factor plays an important part making intrinsic value and premium un predictable.

    Please share your views.

    regards
    Veren Mitter
     
    verenmitter2001, Jan 4, 2013
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  4. shabbir

    shabbir Administrator Staff Member

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    No if my analysis is wrong I opt for stop loss and not hedging.
     
    shabbir, Jan 4, 2013
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