Hedging Against Equity portfolio

(csteja) #22

I prefer to go with future hedging. For options, you have to get both direction and timing right. Otherwise, they go down in value disproportionately. For futures, I only needs to get the direction right by calculation the beta of my portfolio. I generally stay away from option selling as the risk is not capped despite the probability of making money is high. Would like to hear from more investors on how they hedge their portfolio during uncertain times (for eg, during recent budget where market gave no time for 3-4 days if one wishes to sell on pull back).

(varunjindal1989) #23

Two reasons I can think of:

  1. It is done by mistake.
  2. It is done by same person from two different accounts. He is purchasing from account where huge tax is due. So, by purchasing he know he will be entire loss but his lost money will be transferred to some other account where Tax liability is less/negligible. Another loophole where SEBI may need to know who did this.