Has anyone here any experience dealing with finideas.com? They are a sebi registered investment advisory. Recently, I came across a video where one of their founders explains their strategy to create wealth by buying a long term put option. The strategy is very simple:
They invest your capital into nifty (etf or futures) and buy a long term put option expiring in December. So when the market goes down you make money in your put options which is then reinvested into your existing portfolio consisting of nifty instruments at a low price as the market has gone down. When the market goes up your overall portfolio goes up resulting in a profit. The only time you make a loss is when the market remains flat as you tend to lose the premium you paid for the put. The founder claims the maximum drawdown on the investment is only 4 to 5 percent of your capital which is basically the premium paid. He claims his strategy has given around 19 cagr over the years.
In the video he complicates the strategy a bit by investing 30 percent of the capital into synthetic futures and the rest in bharatbonds to take advantage of the low cost of borrowing in futures. He compensates for the cost of borrowing which is around 5 percent by gaining 7 percent in bharatbonds. So the net profit is 2 percent which helps to reduce the cost associated with the premium of the put option. Here’s the video for reference:
