When investors turn aggressive in bullish markets, they are often not content with market returns - even if market returns are quite healthy. That's when the urge to beat the market is the highest - the urge to extract more juice out of the market when the going is good. In adverse market conditions however, the accent is typically towards downside protection first and then look for some upsides. In the previous article in this series, we discussed one such product which investors typically consider in adverse market situations (Click Here). In this article, we will discuss what a "Vanilla Call on Nifty without Protection" is, and why this is a product that investors typically consider when they are bullish on equity markets.

Vanilla Call on Nifty without Protection

Aims to provide returns which are higher than market returns when markets are going up, but with no protection on the downside. However, even though the upside can be higher than a regular market investment, the downside - though not protected - is not larger than the market, and this is what sets this product apart from a typical F&O position.

Features

• Offers an opportunity to participate in an upside rally to earn returns higher than the market.

• No cap on the upside potential

• On the downside, loss will mirror the downside of the underlying benchmark - but will not be larger

• The downside and upside conditions are typically observed on a daily or weekly or monthly basis

• Capital is not protected, return of principal is based on market return

Investment Rationale

• Advantage: Opportunity to participate in upside potential of underlying performance without any cap and earn higher return compared to market on the upside

• Very aggressive View: Offers market participation to enhance returns (150%) on a specific very aggressive market view on the upside

Suitability

• Only for aggressive investor profile with a bullish market view on the appreciation in Nifty in the medium term

Product Specifications

Payoff Scenarios - For Illustration

In the above payoff scenarios based on Final Nifty close at Exit date:

• Investor will earn returns at 150% of market related returns if Final level is above Initial Level

• If Nifty trades at or below 6000, Investor lose out on Principal to the extent of market (Nifty) returns

Payoff Scenario Graphs

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