Let's have a discussion on how you identify risk of a trader trading with you.
Take an example of an account size of
5.50 lakh.
Both Nifty and Nifty futures are at
5200.
Situation1: Short
10 lots of Nifty 5200 CE & PE each at the same time when NF is at 5200 along with long in Nifty futures @ 5200 that too 10 lots. So total
30 lots (Please don't avoid the question by saying these positions are not allowed by your risk mgmt. system for O/N positions. It's a real time example of an account in Zerodha).
Situation2: Long in 20 lots of Nifty futures @ 5200.
My questions are:
1) Which position is more risky?
2) In the 1st situation, do you consider it as
betting all the money in the account on single trade?
3) How would you profile the risk of both the situation?
4) Does time to expiry have any bearing on these situations?
5) What are the other factors that makes a difference between the risk profile of both the situations?
This much for now. Hope your reply would be propaah(!)...