Strategy

WEP Strategy uses NIFTY Options contracts to create an optimum pay-off for our clients.

 

Options, being a part of Derivatives, has guidelines laid down by exchanges and regulator. When someone wants to execute certain derivative trades, they need to deposit a certain amount upfront with the broker. Exchanges call it Initial Margin.

 

Scale Up WEP works on the premise of using limits available on your portfolio. Exchanges allow investors to deposit initial margin in the form of collateral (equity shares, mutual fund units, bonds, fixed deposits). Generally, the margin allowed to be utilized is around 80% (differs on each security) of the value of portfolio. If you have mutual funds units worth Rs.100, you can trade on another Rs.80 worth of margins. So, your portfolio worth Rs.100 effectively is now Rs.180!

Features

  • An External independent advisor recommends minimal-risk derivative strategies to earn from time value of options and spreads in the market.
  • The strategy is a combination of Calendar Spreads & Bull/Bear Spreads.
  • The strategy is on NIFTY and does not involve any stocks.
  • The underlying assumption is that NIFTY will not hit the upper circuit or rise more than 6% sharply within a month. A steady up-move works well for the strategy.
  • Any significant market correction including a lower circuit will result in a favourable pay-off.
  • There is a constant monitoring of the strategy and recommendation by the advisor of the necessary adjustments to optimize the pay-off.
  • During any month of unfavourable NIFTY movements, the effort is to exit the month with minimal losses (max loss incurred till date is 1 % in a month)
Nifty has moved up by more than 6% in a month only 5 times during the last 5 years.