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Diversify Your Risk By Investing In Mutual Funds

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Yesterday FIIs were net sellers of Rs.715.30 crores and DIIs were net buyers of Rs.534.20 crores in cash market for last trading session.

I read this everyday and after medium term I see that most of the times it is DIIs who win and FIIs lose. So for me personally I track what DIIs do and where they invest. This sets the actual trend of Indian markets for the medium term.

When it comes to medium term trading I trade mutual funds large caps or Index funds which nearly tracks Nifty and since the last 2 years my portfolio has been doing pretty well.

You must be thinking why an Option Trader does not trade options but trades mutual funds for the medium term?

Please understand and read about risk-diversification.

Options should be traded if the view is maximum for 30 days. If it exceeds that holding it required which Options cannot do and time value erodes it, but there is nothing as time value in mutual funds and stocks.

I hope you now you understand why and how I diversify the risk – Greed controlled and logic applied.

This is why education and research helps.

More to come.


If you have any question you can contact me.

You can read about me here and my trading mistakes here.

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About the author: I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

{ 2 comments… add one }
  • amit

    Hello sir, good morning!!
    If my view is longer, then why a covered call should not be traded, provided the stock is largecap bluechip.
    Thanks.

    • Amit,
      You should and you can trade a covered call on the stock bought if option trading is allowed there.
      There is no reason not to trade a covered call. In fact according to my Guru, Mark Wolfinger, in US almost everyone on long term stock holding trade the covered calls.

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