I want to Buy/Sell in future in Sell/Buy in Cash market.
- TECHM16JULFUT - 490 and TECHM-EQ - 500
Is it possible to buy in Future and sell in Equities in intrady.
- TECHM-EQ - 490 and TECHM16JULFUT - 500
Is it possible sell in Futures and buy in equities.
Just now i spoke with zerodha people, they told it is not possible.
They said if we buy/sell in futures the we have to sell/buy in futures only.
Anyone idea about this?
You can buy in cash market and sell in future market for profiting the difference. BUT you will need to square off these trades before day close in respective market itself. If not you will be required to take delivery of the bought shares in cash market and your position in future market will be open. If you sold in cash market and bought in future market, your position in cash market will be squared off by broker before day close as you cannot carry short position overnight.
To make in clear, if you buy TECHM16JULFUT from future market for 490 and sold TECHM-EQ for 500, then before day end you will have to sell TECHM16JULFUT and buy back TECHM-EQ for closing these positions. if the price difference is there through out the day you will not make any profit. But if prices of TECHM-EQ and TECHM16JULFUT were to become same, say 500 by day end. you can profit Rs 10 per share in future market and buy back in cash market for sold rate itself(ie. Rs 500), thus losing only brokerage and transaction charges in cash market.
The reason Future price is lower than cash price is due to fact that most traders expect that the price will further do down before the future expiry date.
First of all arbitrage means capturing risk less profit, so as in the above case if one believes that in one day both future and underlying will close at same price then it can be a costly conclusion.
But one can sell or buy both futures and equities for intraday and no issues with that. One can also carry the positions for next trading day if required. Only issue is with shorting equities and carrying it for next day as one is not allowed to short equity and carry for days under normal scenario, still if they intend they can borrow shares under SLB(securities lending and borrowing) scheme and do so.
There's no such thing as free lunch and particularly in markets.
Check this link to see which securities are available under SLB.