Hi,
Please go through the below and let me know either averaging out future is beneficial or not.
Assume I bought BankNifty Sep Future @ 23600
I will close in profit if banknifty is moving upside. But I will have loss if moving downside.
When banknifty is down by at least 500 points
Buy 2 lots banknifty Sep future @ 23100 x 80 (2 Lots)
So, my average cost for buying future will be: 23600+23100+23100 = 69800/3 = 23266 which is my breakeven point now instead of 23600 (first purchase)
And there are chances of market reversal after 500 points downside. Once banknifty is above 23266 I will take benefit of 3 lots future.
===========================================================
Hedging:
For each 1 lot future position we can buy 4 lots 500 points away OTM PE. It will benefit us from a big downside.
Please go through the below and let me know either averaging out future is beneficial or not.
Assume I bought BankNifty Sep Future @ 23600
I will close in profit if banknifty is moving upside. But I will have loss if moving downside.
When banknifty is down by at least 500 points
Buy 2 lots banknifty Sep future @ 23100 x 80 (2 Lots)
So, my average cost for buying future will be: 23600+23100+23100 = 69800/3 = 23266 which is my breakeven point now instead of 23600 (first purchase)
And there are chances of market reversal after 500 points downside. Once banknifty is above 23266 I will take benefit of 3 lots future.
===========================================================
Hedging:
For each 1 lot future position we can buy 4 lots 500 points away OTM PE. It will benefit us from a big downside.