Cash component Collateral

F&O
1

What are your picks in cash component for option selling collateral?

2

Based upon liquidity :

  • SGBs
  • Money market Mutual funds
  • Gilt when you feel interest rates will go down in future( so not recommended for current interest rates cycle)
3

hi,
i use Gsec…/
have option for liquidbees for liquidity.

4

@Kishore443

60 % in money market
30% in GSEC bond maturity in 2025
10% in SGB

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5

GSEC whats intrest you are expecting?
@TradeB2B

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7

@pankushri 7.72%
7.72% GS 2025

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8

using margin for which trading…
index or stocks or currency…/

9

index and stock

10

Index Options selling

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11

have you ever use it for currency options selling ?

ur idea abt currency option selling

12

Haven’t tried it

13

@TradeB2B @Jason_Castelino One question, if i buy the below securities is the indicative returns are floating or fixed?

What if in coming years interest rate goes beyond 7 ? FD returns will be higher close to 8-9 percent.

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14

My original reply is edited and replied again here

15

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So whoever buys 6.99 GS 2051 returns will be 7.86 only till 2051? I doubt. what if interest rate goes to 12-13%? there is loss of 3-4%

16

In the earlier reply I thought that was the coupon rate and thats why I said it will remain fixed.

Indicative yield will keep keep fluctuating depending on the price discovery.
Price discovery will depend on demand for the bond. Demand will depend on interest rate in the market.

In the gsec you have mentioned, in this post

I do not think there is any coupon rate mentioned. So in my opinion there is no periodic interest.

In this one,

You will get 6.99percent on the face value in the form of interest every year.

PS: whatever I have mentioned above is purely out of my theoritical knowledge. I have not invested in any GSec ever.

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17

Yes, your returns will be around 7.86% till 2051.
You will lose only if you want to sell the bond before 2051 and do not let it mature. If interest rates further increase, the bond you hold will lose value and that’s how you will lose some money.

You shouldn’t worry about it if you plan to hold the bond till maturity, your yield will be 7.86%.

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18

Thanks for detailed info :slight_smile:

19

Which one do you think is better?

  • Sovereign Gold Bonds Scheme 2022-23 – Series I - Rs. 5041 per gram

  • Previous SGBs which are already listed which have lesser price per gm.
    I could not check the liquidity to purchase.

I need to know advantages and disadvantages of both.

20

GSec still very tricky. What I think I observe is all the better coupon bonds are illiquid. Only the ones someone wants to dump seems to have more volume.
So anyone very sure of holding to maturity gets probably the best bargain but if one needs to get out, they might wish they never bought them :slight_smile:

Plus they still have the tax inefficiency with periodic interest payout. Paying 20-30% for extra 2% :rofl:
I’m still parking a lot in pledge-able debt funds( like MMF) with Growth option but the downside is they’re all short-dated, hence lower interest.

Wishlist is to get LT investing debt instruments on pledge list.

1 Like