This document discusses various hedging strategies for both long-term investors and traders. It defines hedging as protecting a stock portfolio by minimizing downside risk through offsetting losses with opposite positions. For long-term investors, it recommends hedging by diversifying across sectors, knowing a portfolio's beta and weightage compared to the overall market, and continuing SIPs. Hedging strategies for traders include buying puts, selling calls, and selling futures, each with their own advantages and disadvantages. The document emphasizes that hedging is primarily for insurance against losses rather than earning profits.

1. Portfolio
Hedging
Dr Sachin Kale

2. Hedging
It is protection of your stock portfolio, thereby further
minimizing the downside risk
Hedging is predominantly done as insurance to Protect
Capital , not an earning tool.
Hedging is a risk management strategy to offset losses in
investments by taking an opposite position in a related
asset

3. When To
Hedge?
• Around 15% Downfall in
War(Russia-Ukraine
• Around 45% Downfall in
Covid

4. 1. Capital Protection
2. Mental peace
3. Stay Invested
4.Time is the best hedge
Objectives (WHY TO HEDGE?)

5. Hedging
For Long Term Investors
For Traders

6. Hedging for Long Term Investors (Beta)
Definition : A value that measures the fluctuations of a stock price with respect to
change in the overall market.
Overall Beta of Portfolio should be 1
You should know Beta of your portfolio ; more Beta more Hedging required
High Beta Stocks- Bajaj finance(1.8),Tata motors(1.8)
Low Beta Stocks- HUL(0.26), TCS(0.64), Nestle (0.25)
Method: Buying Low Beta stocks (HUL/TCS) avoiding high Beta stocks (Bajaj
finance/Tata Motors)

7. Hedging For Long Term Investors (Weightage)
• You should know nifty stock weightage compare with your
portfolio(BE SMART)
• One stock should not be more than 10% one sector should not be
more 20% (DIVERSIFY YOUR PORTFOLIO)
Avoid stocks like Yes Bank (Dont be emotional) paytm(largest IPO)

8. Hedging For Long Term
Investors
• Continue SIPs
• For every 5% of Nifty fall, Buy Niftybees
depending upon your portfolio size
• Stay Invested (COMPOUNDING)
• Gold is inversely proportional to Equity Index
• Mixture of Contra Stocks
Paints Vs Oil (Crude Price)(WAR)

9. Hedging Strategy For Traders
• Buy Put
• Sell Call
• Sell Future

10. SELL
FUTURE
• Unlimited
Profit
• Unlimited
Loss
• Limited profit
• Unlimited Loss
• Unlimited Profit
• Limited Loss
SELL
CALL
BUY PUT

11. Buy Put
Advantages
• Less Margin Requirement
• Covers downside completely
• Limited Loss if Market Reverses
Disadvantages
• Complete loss of premium if market moves sideways or
Upside.

12. Future Sell
Advantages
• Covers complete downside
• It moves with Nifty(Approximately)
• No Premium decay
Disadvantes
• High Margin requirement
• Doesn’t Cover Upmove of Index

13. Call Sell
Advantages
• Partial cover of losses
• Beneficial in Sideway market (Premium decay)
Disadvantages
• Doesn’t protect in upmoving market
• High margin requirement

14. DIVERSIFY
HEDGING
STRATEGY
BUY USDINR FUT
BUY GOLD FUT
BUYING EFT LIKE NIFTYBEES
BANKBEES AND GOLDBEES

15. Take Home Message
• Recommended 2 Demat Accounts
1. Long Term Investing
2. Trading
• Enter FNO market after studying for at least
3 Years
• Hedging is predominantly done as
insurance; not an earning tool
• Orthopaedics income is primary active
source and stock market is secondary and
passive source

16. DISCLAIMER
I am not a SEBI registered Agent or Advisor.
These are my personal opinions.
I do not recommend any Stock or Index for
investment.
Do your own research before investing your hard
earned money.