Relax Plan

The RELEX plan involves investing Rs. 1 crore with 100% initial investment required. Rs. 30 lakhs is allocated to Nifty Bees, which is pledged for margin in the Futures and Options segment. Synthetic Futures of Nifty 50 are purchased with an exposure of Rs. 70 lakhs. Put options are also purchased. The remaining Rs. 70 lakhs is invested in Debt Funds. The plan incurs costs such as hedging and forwarding costs. Interest is earned from the debt investment. The net cost is calculated as 3.5 lakhs. RELEX plan is illustrated with a Rs. 1 crore exposure example. 100% initial investment required. This plan necessitates a complete initial investment. Rs. 30 lakhs parked in Nifty Bees. A portion of the funds, specifically Rs. 30 lakhs, is allocated to Nifty Bees. Pledging of Nifty Bees for Margin in F&O Segment Nifty Bees is pledged to secure margin in the Futures and Options, F&O, Segment. Purchase of Synthetic Futures of Nifty 50. Synthetic Futures of Nifty 50 are purchased, amounting to an exposure of Rs. 70 lakhs. Purchase of Put Options. The number of lots purchased is equivalent to the combined position of Nifty Bees and Nifty Futures. Investment of Rs. 70 lakhs in Debt Funds. The remaining Rs. 70 lakhs is strategically invested in Debt Funds. Costs in the RELEX plan. Hedging Cost. Represents 5% of the total exposure value, amounting to Rs. 5 lakhs in the given example. Futures Forwarding Cost. Calculated as 5% of the futures exposure, equivalent to 3.5% of the total exposure. For the provided example, it is Rs. 3.5 lakhs. Gross Cost. Comprises the sum of Hedging Cost, 5%, and Forwarding Cost, 3.5%, resulting in 8.5% of the total exposure value. In the given example, this amounts to Rs. 8.5 lakhs. Earning Interest from Debt Funds. Included 7.15% on the debt investment, which is 5% of the total exposure. For instance, the interest earning on the 70 lakhs debt investment is 5 lakhs. Net Cost, 3.5%. Computed as Hedging Cost, 5%, plus Forwarding Cost, 3.5%, minus Interest Earnings, 5%. In the provided example, the net cost is 3.5 lakhs, calculated as 5 lakhs, Hedging Cost, plus 3.5 lakhs.