In part I of this series, we looked at how we can hedge our portfolios using futures. In this part, we explore ways to hedge portfolios using another derivative instrument, options. Firstly, we want to emphasize that we will not provide an introduction on how options work. One can read a good primer at http://www.investopedia.com/university/options/option2.asp.
>HEDGING AGAINST MARKET RISK USING OPTIONS CONTRACTS:
The way to hedge for market risk is to buy put options for a percentage of the notional of the portfolio (how much, is based on one's market view). In India, the most traded and liquid option contracts are on the NIFTY...Click here to read full article.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment