Comment on Cover Orders - For Higher Leverage

Nithin Kamath commented on 12 Dec 2013, 10:11 AM

Karthikeyan, what you are referring to is not a cover order. It is just a hedged position. As stock keeps moving up, your short calls loose you money, but long futures make you money on a MTM basis. In this particular example, you will not be required to add any MTM for your option loss as the risk of your short option is completely hedged by long futures.

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