Selling your active positions or converting your investments into returns!
There are precisely two ways of converting contracts into money ie Take an early exit or hold shares till settlement.
After you start trading, you begin to accumulate positions in different events. A position is the number of contracts you own in a particular event on Yes or No or even both Yes and No, and represents your current investment. Your position might be ten thousand Yes, or five No, or zero in any direction.
There are two options for closing your positions (a.k.a. cashing out your contracts): hold them until settlement, or sell them early to lock in profits.
In some cases, you might want to sell your contracts before the outcome of the event is known to lock in profit or minimize losses. You can do that by placing a sell order to reduce your position.
Read the following case study to understand various probable scenarios and strategies to hedge profits in an event: You have 4 shares of Rs.54 each on Yes in an event. Price for Yes moves to Rs.60 and Price for No reduces to Rs.40. Considering market is highly volatile, what would be your next move?
- Take exit on all Yes shares and book Rs.6 profit on each share.
- Take exit on 2 shares and hold 2 Shares.
- Take exit on 2 shares of Yes and buy 2 Shares of No at a reduced price of Rs.40
- Not take exit on Yes shares and buy 2 shares of NO at Rs.40.