Theoretically you are correct, but practically the opposite happens a lot, especially since fno traded contract value is so so much higher than in the cash market, and the stakes are very very high.
1 Like
Yes I know. In cash market stakes are low, but in options your whole future is at stake.
Yes. It’s riskier ofc and that is why there are lots of stock/index adjustments/manipulations by big players to meet their existing derivatives positions. With Fno, its very important to size and hedge accordingly. What I like about derivatives is it allows one to be almost fully invested and also continue playing both sides of the market to eke out extra returns. Some like @Jason_Castelino even plan taxes using derivatives positioning + existing portfolio.
1 Like