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Nervousness after a big fall in market advocates alterations using options: Shubham Agarwal

These alterations are to have a Conjoining trade along with the existing trade that is aimed just to improve your risk-reward profile.

October 30, 2021 / 11:13 AM IST

After the drop in the market this week, many must have realized that we should look at the starting point of this spectacular rally. It is scary. Such fright that comes into our minds every time we go into a few percentage points pull back after a big move can be combated with the help of few handy alterations.

Now at this price point in the market, we have a lot to lose. We have talked about the practice and prudence in hedging when the market is at its extreme.

However, in the case of pull backs in a rally that shakes the confidence a little bit yet keeps the conviction in the overall trend intact, we should keep trading with trend but with few alterations.

This alteration is to have a Conjoining trade along with the existing trade that is aimed just to improve your Risk: Reward profile. I wouldn’t necessarily call it a Hedge as it is always looked at as a mechanism just to stop from bleeding further.