The idea is to go long on Nifty futures and roll the position over every quarter until December, while buying a December 24,000 PE as downside protection. I’m planning to scale in with 3 lots, entering one lot at a time.
The max risk per lot is essentially the put premium plus the difference between Nifty futures and 24,000 (currently ~200 points), which comes out to roughly 1,000 points (~₹65,000 per lot).
With 3 lots, I’d effectively control ~₹45L worth of Nifty exposure using less than ₹5L margin. I plan to keep another ₹5L aside to manage MTM on the futures side to avoid margin calls—this should give a buffer for ~2,000 points downside. The margin can also be backed by collateral.
For capital efficiency, I’m considering parking funds in liquid funds generating ~5–6% annually, which helps reduce the overall cost basis.
Additionally, on rallies, I plan to sell calls and convert the position into a collar to further reduce costs.
Overall, the goal is to run ~4–5x leverage (similar to a home loan) and continue this strategy through 2026–2027.
Costs:
- Roll-over costs
- Put premium
Cost reductions:
- Selling calls on rallies
- Liquid fund returns
Net-net, the effective cost of leverage comes down to ~2.5% p.a., which is significantly lower than a typical home loan rate of 8–10%.
What do you guys think? Any risks or blind spots I might be missing?
took help of A_I to draft this better. Also this is based on my bullish assumption. I expect nifty to give decent returns after a 2 year side ways market. If its going to be sideways or bearish for the next 2 years, i'm willing to take the hit.