Option Observation

[knarendra]

Very valid question knarendra.
But let me tell you , you can buy Nifty in cash also and that is through nifty bees.
Yes if you buy in cash and sell the future you are sure to make that 28 points in one month. But then , what is your ROI ???
A bank FD will give better returns !

regards.

I think the Nifty Bees is equal to Nifty- Nov furure.

Nifty Cash: 5760

Nifty Bees: 579.94 ( Nse)
581.20 (Bse)

Nifty Nov : 5794

How can we collect the (5794-5760) 34 points?

pl.explain me.

 

[THETRADER]

I think the Nifty Bees is equal to Nifty- Nov furure.

Nifty Cash: 5760

Nifty Bees: 579.94 ( Nse)
581.20 (Bse)

Nifty Nov : 5794

How can we collect the (5794-5760) 34 points?

pl.explain me.

NiftyBees is an Exchange Traded Fund, issued by an Institution, in this case, Goldman Sachs. Buying one NiftyBees is equivalent to buying the composition of all the Shares in Nifty in that ratio. The Institution in turn buys and holds the shares in Nifty in that ratio to the equivalent of outstanding Niftybees. One Niftybees is 1/10 of Nifty approx. and is expected to track Nifty closely.
Assuming that Niftybees tracks Nifty closely with its premium/discount as the case maybe, you are targeting 34 points, which is about 0.5%.
If you buy Niftybees and sell Nifty Futures (NF), you will have to have a cash margin about of 110% plus MTM requirements on NF. With all the transaction costs of slippage, brokerage, STT and other levies, you cant even be in profits!