Let us say we want to BUY RELIANCE futures and SELL NIFTY Futures for June 2021 series.
As per Zerodha margin calculator , this is the margin amount required for these two trades based on Friday’s prices.
Margins for day trades are lower but from September that too will not be available.
We can use options as synthetic futures in such situation.
NIFTY Futures Sell:
We can buy June PUT 16000 which is deep in the money and is costing just Rs. 570.
We need only Rs. 42750 to buy this PUT and will give almost same results as selling NIFTY futures. No worries about MTM adjustment too.
RELIANCE Fututres Buy:
We buy ITM CALL 1940 or 1960.
It will cost Rs. 45000 or Rs. 40500. Again the benefits are similar. The gains in case of an up move will be slightly less than the futures trade but cost is significantly lower.
In case of a big fall, the loss will be less than the loss in futures.
This is called Synthetic Futures.
Day trades can make use of deep ITM options to get benefits similar to futures at lesser cost.
Please join OptionsNext on Telegram — https://t.me/joinchat/qE4A5J0STTk2ZTJl
Disclaimer: This post and examples are for teaching purpose only and are not meant as advice/suggestion to trade in these stocks. Trading in Futures and Options can lead to big losses and should be done with appropriate knowledge and advice only. Mentioning the stocks here does not imply that I have a trading position or likely to take a trade in these stocks.