Rs. 1 Million (10 Lakhs)

During covid pandemic, many youngster's and home makers are very keen in investing and trading in stock markets. Few are interested in crypto currencies investment but I'm not a big fan of crypto's. Let's say if i had 1 million rupees (Rs.10 lakhs) in my trading account and what will i do ?

There are 3 options in front of me

• I can invest equally in 10 different companies in stocks of multiple sectors following SIP process ( I never invest in 1 shot ). This is also referred as having diversified portfolio

• I can use this entire money in trading equities or derivatives (Futures and Options)

• I can spread this money into 2 half. One part can be used for Investing consistently in different companies and other part can be used for trading and earn monthly income

People who invest should have great amount of patience and have a long term view to achieve abundance wealth. People who fall under 3rd category will have a mixed approach. They will look for long term in part of their investment and look short term on their trading. People with 2nd category is the one who are tend to lose their entire savings easily and there are people who make money out of FNO trading regularly. Let's see how this can be achieved

In order to make money in Derivative trading, below are important before starting

• Knowing how Premium & Margin works 
• Diversification on companies and strikes
• Adjustments on positions
• Risk Management
• Know when to EXIT

In India, Index (Nifty and Bank Nifty) have weekly expiries and stocks have only monthly expiries. Let's say i trade on stocks and what are the stocks will i consider to trade for the month of October 2021 if i had 1 Million (10 Lakhs)

Aarti Industries

Current Market Price of Aarti Industries is 934.15 and for October 2021 expiry the 900 PUT can be sold at Rs.26.62 and 860 PUT can be hedged at Rs.16.00. Lot size of Aarti Industries is 850 and the Margin required for the above one lot is Rs.60,600 (approximately)

COLPAL

Colpal was trading at the price of 1672.65 and for October 2021 expiry the 1660 PUT can be sold at Rs.50.00 and 1620 PUT can be hedged at Rs.34.95. Lot size of Colpal is 350 and the Margin required for the above one lot is Rs.34,900 (approximately)

INFOSYS

Infosys was trading at the price of 1688.95 and for October 2021 expiry the 1600 PUT can be sold at Rs.29.55 and 1560 PUT can be hedged at Rs.18.65. Lot size of Infosys is 600 and the Margin required for the above one lot is Rs.58,500 (approximately)

TATA STEEL

Tata Steel was trading at the price of 1302.95 and for October 2021 expiry the 1280 PUT can be sold at Rs.62.65 and 1240 PUT can be hedged at Rs.46.25. Lot size of Tata Steel is 850 and the Margin required for the above one lot is Rs.72,600 (approximately)

Above companies are just an example of how we can diversify our trading amount in different companies in different sectors and trade on these companies understanding the price movement of these stocks in past weeks and months

If i had a Million rupees, i would consider diversifying my portfolio and have taken positions in different strikes of a company to make money by end of the month. I would never consider or take position by thinking of making money this evening or tomorrow morning or earlier next week. I would also have buffer money for making any adjustments, which i might require to take if any of my positions go terrible wrong. Being an Option Seller, i would never consider to buy any naked position until my adjustments are required to do so. 

Disclaimer: Stock Market Investing and Trading are subjected to high risks. This blog is only for educational and informational purpose. This is not an Trading / Investing advice. Consult your financial advisor before trading.

Have a Great Day

B G Nareshkumar