How can Retail Investor hedge?

Read lots of time that you can buy share in Cash Segment and to protect your position you can hedge by buying a put option.

Now, quantity of one lot of Put is very high. For example for Tata motors , 1 lot has 1500 quantity. So If I want to hedge Shares of Tata Motors , it can be done only if I buy shares of Tata motors in Cash Segment in multiple of 1500.which is huge amount of money around 5.5 Lakhs as per CMP.

Is there some other way to hedge for retail Investors ? Kindly explain in detail.


This is not true. Let’s say if you bought 100 shares of tatamotors at 350 rs. Total risk = 35000 now if you think it will have a downside of lets say 10 to 20% worst case scenario in this month you can go ahead and buy 1 lot of OTM puts at about 1 to 2 rs for near month which will cost you about 3k. If you want to hedge till next month. You can buy next month contract for about 5k

If it does at all goes down a lot you can basically get all your investment back with just buy puts. But IMO it doesn’t make much sense if you have a very small position of less than 1 lac Rs if you want to stay invested.


Look up delta hedging for stocks.

The delta of the option can act as proxy for the number of share you want to hedge.

you don’t need to worry about lot size , its the premium and delta that you need to worry when hedging stocks with put options.