If long only Equity is a car, it is missing the reverse gear. Black Box Alpha is that missing reverse gear. Derivatives can go short, Buy protection against downside, Write calls options etc…
Without Leverage, expected return is just 10% or above, per year. DrawDown never exceeds 10% of capital. Hedge Strategies are Direction Neutral and Moderately safe.
This is not Intra-Day trading. F&O positions are kept until expiry without churning. Intention is to keep number of trades executed between 4 to 8 per month. This keeps transaction cost tiny.
Sell Deep OTM nifty call against the equity portfolio as hedge.
Shorting Nifty future and selling ATM Put as “covered Put” to gain in down trend. Covered Put gives limited profits with no downside risk.
An income generating strategy from OTM Put sell. Also, Writing Puts is used to to Purchase Stocks at lower levels. Deep OTM Put strikes are chosen. Detailed Explanation by Investopedia Click
Hedge strategy used to earn limited profit. Safe from Blackswan event.
After determining the probability of a price “Not” coming, we go for credit writing spread.
Very well explained by Zerodha Varsity
For every asset that you put up, you receive margin after a ‘haircut’. For example, if you collateralize funds worth ₹10 lakhs, the exchange might give you a margin of ₹8 lakhs for derivative trading, the difference of two lakhs is kept by the exchange to protect itself from market downsides. This is referred to as a ‘haircut’.
The minimum investment is ₹5 lakhs and we invest majorly in index options, futures and equities.
This suits someone who already holds an Existing Portfolio & Seeking additional cash flow against this holding.
The portfolio can be existing Stocks or Mutual Funds (exclude ELSS).
Broker provides margin against holdings. We use this margin To generate additional cash flow from Derivatives.
Risk takers who volunteers to see a drawdown upto 20% on capital.
Not suited for retired personnels with no other source of income.
Futures and options have an inherent risk because of the leverage built into derivatives. However, derivatives also help you control your risk using different types of hedging techniques.
We understand derivatives is an notorious product due to its leverage.
We do not use beyond 50% leverage while derivatives provide you with 900% leverage.
10 Thousand for every 1 lakh profit.
Public gets access to professional Stock pickers via Mutual Funds or Portfolio Management Services (PMS).
Similar Access is not available for professional Derivatives strategiests.
Stock portfolio managers from Mutual Fund or PMS get the privilege to pool your capital into a single account. This brings ease of capital management to professionals.
Derivatives professionals cannot pool capital into single account. It must be done on individual Trading Account basis. This is tedious to manage and monitor for a manager.
We know professional derivatives strategists who can generate 30% or above consistently per year. These people don’t go through the hassle to manage others money.
We have launched BlackBox Alpha product with aim to generate somewhere between 10-15% per year only.