Moneycontrol

Budget 2023Budget 2023

PARTNERS

  • Tata AIA Life Insurance
  • Hafele
  • Motilal Oswal
  • SMC Global Securities Limited
  • SBI Life
  • DSP Mutual Fund
Upcoming Event : LeapToUnicorn - mentoring, networking and fundraising for startups. Register now

Here's how F&O traders can use hedging strategies to mitigate risk in equities

Here are some of the hedging strategies that can help you manage your portfolio risk

September 25, 2021 / 02:17 PM IST

Hedging is a risk management strategy employed to offset the losses in your existing asset by taking an opposite position in a related asset.

For the Indian equity and equity futures and options participants, this is generally simplified into a single transaction:

Buy a Put Option against your Buy trade

As we all know Put option that costs premium has a characteristic that such premium rises in value if the stock or index that the option belongs to (underlying) falls. In case if its underlying rises Put option will fall.