Analytical Study on Optimization of Risk and Return using Hedging Bullish Strategy in Indian Stock Market

Abstract

The study targeted to explore on the impact of BANKNIFTY derivatives transaction on spot market volatility using bullish strategy in India capital market. The scope is confined to equity future and forward contracts. Bullish options strategies are employed when the options trader expects the underlying stock price to move upwards. It is necessary to assess how high the stock price can go and the time frame in which the rally will occur to select the optimum trading strategy. In most cases, stocks seldom go up by leaps and bounds. Moderately bullish options traders usually set a target price for the bulls run and utilize bull spreads to reduce risk. While maximum profit is capped for these strategies, they usually cost less to employ. In this connection, this research mainly aims at valuation of risk and return using Bullish Strategy on Bank Nifty strike prices. The bullish strategy results in that there is marginal profit earned with bank nifty in the mid-month and again it has earned losses at end of the month. Therefore, it is inferred that the valuation of risk and return positively influencing bullish strategy to earn or maximize the profit in investing bank nifty in the stock market of India.