Thursday, November 24, 2011

How to mitigate Risk through Futures and options?

I am going to be alloted 200 shares of company X for a price of Rs. 300 , in 3 months time. The current market price of the share is Rs.350. But I am not sure if the same price will be there for 3 months. I am happy to sell it for Rs.350. If I enter into a futures contract can I mitigate my risk. Please advise. Kindly note the solution should be specific for the Indian markets.|||as you will be alloted only after 3 months.


i guess,it will get too complicated, you will have to simultaneously employ both futures and options of your company X, and still your risk will be limitless...unless you willing to invest about rs 65k(which you won't lose,no matter what) to safe guard your 200 shares(50rs profit)


the good thing will be to wait it out till you are alloted, and incase you give the actual name of the company, can tell you specific details.

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