How to play or what should the strategy be when the Future price is discounted more than 10% comparatively to CMP.
Today Ibul housing finance’s CMP is 560 while in future it is trading at 509.
How to play this disparity?
if you could short ibul housing finance’s stock till the backwardation vanishes then you could make 51 bucks per stock risk-free. But sadly you can only short intraday and that too is hard because of poor liquidity in the market.
What if I sell 540 PE and future simultaneously and buy 560 CE
The only efficient way you could do this is by borrow stocks using SLB and sell on the market and buy a future contract. You can close the trade on the expiry day when the prices equalise.
Due to the backwardisation, the stock is being offered at Rs 36 on the SLB market.
Below is the P&L of the locked C&C trade.
Given the margin block, is it really worth it?