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Personal Finance Blog India –

JOBBING, ARBITRAGE AND HEDGING OPPORTUNITIES IN INDIA:


There are different kind of peoples active in the markets.

1.INVESTOR :  Investors  have a very long term approach.Short term volatility never mind them.

They always invest based on fundamental study of respective stock or commodity. This cateogaryis normally found in cash market,,not in future or option market.

2.TRADERS : Traders have a attitude of short term to intraday.It may be fora few days or intraday also.Short term aspects are considered and trading is basedmore on Technicals than fundamentals.

3.JOBBERS:This is the most active community of market.Most of the volume comes from the jobbers(apprx. 70%).Main objective of jobbing is to enhance volume for your broker.In turn broker will offer you a very discounted brokerage. Jobbing trades are more in Future & Option market than in cash market.As positions are meant for very small duration in general brokers provide high leverage to jobbers.

It is in advantage of both trader and broker.Jobber with well market understanding and resources have a very nice jobbing opportunities.

4.ARBITRAGERS: Arbitraging means initiate buy and sell position of same script at different markets.

E.g. If copper price at MCX is 420 and at the same time due to any reason price is 445 at ICEX .Then Arbitrager will initiate buy position at MCX and sell position in ICEX.He will benefited when prices will match in future.

5.HEDGERS : Hedging means initiating Buy – Sell position at a same time in similar (not same) kind of scripts.

E.g: In commodity market,prices of Lead and Zinc are expexted to be with a gap of 1-3 rupees,, But sometimes this gap widens to 20-25 rupees.Then hedgers initiate Buy – sell position and get profit when gap start become narrow.

Also,hedging can be done in spot and future market.Suppose, investor have physical Gold of Rs.10L and chances are that prices will fall 20% in near future.Then to protect his profit what options do investor have? First option is to sell Gold owned by him and protect profit.

Second option is to sell equivalant amount of Gold in Futures Market i.e.Hedge the position and book profit at appropriate time.

Purpose of hedging is mostly Protecting the profit and not earn the profit and needs informed decisions to do succcessfully.

Finally one needs to calculate risk taking capacity before deciding its role in market.

There are training institutes to learn jobbing,arbitraging,trading etc.

But,, can we learn bicycles by reading books? or can we learn swimming by observing other? May be NO.It requires interaction with the system and expertise can be achieved with sufficient exposure and experience.


Category: Commodities, Uncategorized

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