Sampadha’s Valuable Mine

Valuable Mine Strategy is a semi-discretionary quantitative derivative strategy recommended on Yellow Gold and Black Gold(Gold Mini + Crude Oil).

Product Objective

The objective of the strategy is rapid capital appreciation from Yellow Gold and Black Gold(Gold Mini + Crude Oil).

However, there can be no assurance that the investment objective of the strategy or product will be achieved.

What is Quantitative Strategy?
  • Quant based strategies are complex models used to identify opportunities. These models consist of strategies based on Quantitative parameters which rely on Fundamental, Technical, and Derivatives data.
  • Technical, and Derivatives data and Statistical models are developed by leveraging data on parameters that impact price movements of underlying instruments.
  • Price, Volume, and Open Interest are the major data inputs for Quant models.
  • Hedge Funds and other big financial institutions use these strategies to generate additional returns.
Benefits of Quant Models
  • Reduces Human emotions, biases, and minimizes errors during trading decisions.
  • A disciplined selection and execution process offers better risk control.
  • Consistency in strategy, viz. in the screening of opportunities and implementation.
  • Uncorrelated returns with other asset classes and sub-asset classes.
  • Additional investment option for market participants.
Product / Strategy suitability

The strategy is suitable for traders/investors/participants who are seeking

  • Regular income and stable capital appreciation over the long term.
  • Suggest trades primarily in India’s most traded, and high liquid equity derivatives based on technical and derivatives analysis.
  • Subscribers who are looking for regular income and additional returns from their ideal assets.
  • Investors who are looking for uncorrelated returns to the other asset and sub-asset classes.
  • Participants like to focus on the process instead of outcomes and like to deal with uncertainties of life and business.
About the Strategy
  • Valuable Mine strategy will actively look for opportunities to achieve the objectives of long-term capital appreciation by trading in exchange traded derivatives positions of crude oil via long and short positions.
  • The product or strategy considers long or bullish positions in USDINR and Crude Oil futures and bearish or short positions in its options.
  • Crude Oil as an asset class has the best potential to act as a hedge against inflation in the long run and has the potential to hold your capital value in the long run. Derivatives as an asset class have the triple advantage of asymmetric returns, hedging or reducing underlying risks, and generating cash flows. Hence a combination of Crude oil and its derivatives gives a unique combination of protecting capital in the long run and simultaneously generate cash flows in the short run
  • Derivatives as an asset class have the triple advantage of asymmetric returns, hedging or reducing underlying risks, and generating cash flows.
  • Valuable Mine suggests trades in one of the world largest traded derivatives instrument which is highly liquid in all of its instruments
Product Requirements
  • Valuable Mine is a Monthly product and the strategy will be evaluated Quarterly. However, the product can help meet the long-term goal of capital appreciation and cash flow generation.
  • The product requires an ideal ticket size of Rs.15 Lakhs cash margin or a combination of Rs.18 Lakhs Collateral (Approved Bank Fixed Deposits or Bank Guarantees or Approved Stocks or Approved Mutual Funds or combination) and Rs.06 Lakhs cash margin.
  • Accepted collateral for equity shares, mutual funds is 60% of the portfolio’s market value. The maximum collateral amount for equity shares, mutual funds is Rs.12.6 Lakhs.
  • The margin from collateral accepted for Balanced funds or Debt funds is calculated at 80% of the portfolio’s market value.
  • Clearing Corporations and Exchanges approved margin from collateral may be used.
  • For better performance or results, subscribe to the product for a minimum period of 2 years.
What to expect!
  • An almost equal number of winning and losing trades.
  • The average profits for winning trades may sum in the range of Rs.25,000/- to Rs.40,000/- per trade, while the average losing trades may sum in the range of Rs.-25,000/- to Rs.0/- per trade.
  • The losing streak may be up to 15 consecutive trades.
  • Regular cash flow generation and steady high capital appreciation over the long term.
What not to expect!
  • Quick profits from the strategy
  • Getting rich overnight
  • Consecutive money-making months
Product considerations

The products’ Subscribers/ Clients/ Investors should consider the risks involved with investing and trading, decide (or consult your financial planner) whether the strategy suits your risk profile, investment requirements, and financial goals.

  • Also, assess your financial status so that you have sufficient resources and emotional tolerance to bear any losses which may result from this strategy or product.
  • If you’re unsure whether the strategy or product is right for you, consult your financial planner else, please
  • Check our risk profile questionnaire to find out suitable products and strategies for you.
Strategy Risks

Capital Risk:

Investments or trades are subject to market, economic, regulatory, market sentiment, and political risks. In view of these risks, the strategy may experience high volatility from time to time. The value of the investment may become worth more or less than at the time of the original investment. The investors or traders should consider these risks that may impact their capital, before investing.

Derivatives and Leverage:

The product or strategy uses derivatives which shall result in increased leverage and may lead to significant losses.

Price and Liquidity Risk:

  • The product or strategy may suggest trades and investments in high volatile phases of markets and may also hold positions that may become illiquid.
  • The risk of overpaying for a company may happen due to abnormal behavioral aspects in the markets.
  • Proper timely exit or cost of efficient sale can be impaired due to reduced trading volumes or increased price volatility.

Market Risk:

The product or strategy is subject to regular market fluctuations (or volatility) and the risks are associated with trading or investing in financial markets. Therefore the value of asset or investment and income from the asset or investment shall rise or fall and you may not get back the originally invested amount. In the case of derivatives, you may even lose more than the originally invested amount.

Long Short Strategy Risk:

The underlying or strategy could face higher losses if its long and short exposures move unfavorably or both in opposite directions at the same time.

Short Selling Risk:

A short sale exposes the strategy or product to the risk of an increase in the price of the underlying (or derivatives); this could result in a theoretically unlimited loss.

The additional risks of using derivatives strategies can be:

  • Illiquidity and mispricing of the Futures/Options.
  • Lack of opportunities.
  • The inability of derivatives to perfectly correlate with the underlying (Stocks, Indices, Assets).
  • The cost of a hedge can be higher than the adverse impact of market movements during high volatile periods.
  • Exposure to hedging over and above the hedging requirements can lead to losses.
  • Exposure to derivatives strategies can also limit the profits from a genuine investment transaction.
  • The prices which are seen on the screen need not be the same at which execution will take place.
  • In the case of option writing, the downside of the strategy could be more than the option premium earned.

Click here to know more about different risks and managing them

Risk management
  • This strategy is aimed to capture all three phases of trends (Bullish, Bearish and Neutral of the underlyings).
  • The strategy focuses on high conviction trade setups and underlying fundamental news flow which helps the trade direction to move in favor of our view, while seeking to mitigate concentration risks through diversification across highly liquid underlyings.

  • This product actively looks for trading opportunities frequently and is a highly suggested strategy for high risk – high reward seeking market participants.

  • Risk management is inbuilt in the strategy process. The strategy is developed to minimize losses in losing trades and maximize profits in winning trades. It aims to capture profit potential move of the underlyings by entry mechanism, while seeking to limit downside or losses through active risk management using derivatives.

  • Investments in securities market are subject to market risk

  • Returns are calculated on Cash invested only

  • Collateral value is not considered for returns calculation

  • Past Results are not indicative of future Results

  • Derivatives and strategies involve significant risk

  • Loss beyond original investment may be possible

  • Registration granted by SEBI and certification from NISM in no way guarantee performance or provide any assurance of returns

  • As the strategy is implemented on derivatives, it is a high-risk high-reward strategy. The amount invested is always at high risk. However, we do our best to mitigate the risk. Through active research, we strive to deliver an enhanced risk-return profile for the product or strategy. Trades are always suggested with hedge or insurance, hence the risk is minimized.