Low Beta High Beta Stock's Secrets | Vijay Wealth Advisor - YouTube

Hello friends, once again I welcome you to my channel: Vijay Wealth.

Many people are aware and many aren't about the topic we are going to cover in this video today.

Whether you are a newcomer, new bee, fresher or experienced,

You can get an extra edge by using this.

I have got feedback from many people,

that my pace of speak is slow.

So I have a humble request to all those people that,

kindly pay focus to the content, and nothing else.

Rest there are many people who create non-sense videos.

And there is a saying: Stock market is a tool of transferring money from impatient to patient.

Mind my words - from impatient to patient.

You give 12 hours to your job everyday, but you cannot give 10 mins to a video which will earn to good profit.

You study 20 years for 20k job. Just think about what I am saying. And I do appreciate your feedback. Will work on that.

And I don't prepare a script for the videos. I just share my knowledge.

Anyway, todays topic is: HIGH BETA and LOW BETA STOCKS.

So, what is Beta?

Actually, beta is directly proportional to the volatility of the stock market.

High beta stocks means that the volatility is the market will increase.

No matter upside or downside, in that proportion only the shares will go either up or down.

Suppose beta of some stock is high.

So suppose market gets up by 5%,

So they will increase by 10-20% at least.

And vice versa. If market gets 5% down then they will go 10-20% down.

Now how can we use these beta in our trading or investing life.

I got a chance to meet some good investors and traders.

My observation of them is: All these experienced people who are into business or job, they follow this Beta strategy.

Investors with 5-10-15-50 lacs money don't get into get involved in market much.

What these guys do is...

These guys look for Beta stocks.

Beta stocks (ITC) that do so-so and stocks whose moment is 10-15% whole mont.

NTPC, ONGC, Powergrid; I mean all the PSU and PSE companies.

These pace of these stocks is slow, don't break/fall much and same goes for going upward.

So according to my observation, experienced players play against premium every month.

See see the range of the stocks.... 10-15%,

So they sell put 10-15% (downward).

Suppose NTPC is 95, so selling put of 80, of amount Rs 3-4 in the beginning of the month.

Lot size 5700, selling one would be around 2 lacs.

If you do this 12 months, then there will be a month similar to Covid-19 pandemic and you might suffer a loss that month.

Otherwise you will all months. You may check data/strategy, of previous months and you will understand.

ITC... from 150 to 250..... then we witnessed pandemic, market went down as well,

but ITC did not go low much.

And we also witnessed market climbing up from 7500 to 15000.

ONGC... Suppose it is 95.

You sold PE of 80.

Now the question arises: why PE... why not CE.

Because downside of these stocks is limited whereas upside can be anything.

SBI... within 5 days it reached 400 and was at 300.

So you may get stuck in upside, but not in downside.

Many people who have good amount of money,

Lets take an example, PNB. So once upon a time it used to be 1400.

It got split into 5 parts, 240 to 300/350, is at 35-38 these days.

PE of 30 would be 1.7 approx. or maybe 1.

Sell lot of 16k, slowly the premium would melt and become 0.

Now suppose its below 30, there comes a correction and it gets low,

Next month sell 25.

The thing of Re 1 will have stoploss of 2, so there is a loss of 16k.

But you keep on doing the next month as well. Now the company won't be doomed/finished.

So this is the strategy of experienced players. These players look for low beta stocks.

If I summarise this, then what you have to do is, but before that let me tell you how to know which one is high beta and which is low beta.

1, 1.30, 1.40.... This is low beta.

so if market faces downfall of 5%, then these too will face similar fall (5-7-10%) if they are below 1.

And if beta will be high (more than 2, or 3), and market falls by 5% then these fall by 25%.

And vice versa, if market will increase by 5% then these will increase by 25%.

Now let me explain you by an example.

All those who witnessed Covid-19 pandemic, more than half the people kept ITC with them.

What was the return?

Market stoop up by 100% and even then it (ITC) did not do so well.

And in that time period only, IndusInd reached 100 from 250.

Because Beta of IndusInd is above 2-3

And when it stated getting low, it broke to 80% when market was down by 40%.

So the experienced players who do option selling, should do the selling and buying of stocks according to their beta.

Now let me tell you a real story of someone I came across.

Bajaj Finance was at 2300. He sold call of 2700 in Rs 5 and sold 2 lots of size 500 each (1000 total).

Thinking he will earn 5000 free of cost.

Bajaj Finance is extremely high beta stock, you can never sell its CALL neither PUT.

And if you are doing that then you are taking a big risk, you might earn but you are not playing safe/safest.

That person's stock/thing reached 100 from 5.

He booked a loss of 1 lac to earn 5k.

If that person is watching this video then he would remember that we never do option selling of high beta stocks.

Now summarising this video,

Those who want to earn money in safest way and want to carry on with their jobs as well,

what they should do is: Go for low beta stocks (below 1), and whose moment who months is between 15-20%,

sell put of these stocks (15-20% down) and earn every month

Secondly,

If someone, observes that NIFTY can stoop up by 500-1000 points,

So he should buy high beta stocks, can earn more and also if he has conviction about the same via some mentor, advisor or maybe by his self study.

Sometimes I receive queries such as: We have NTPC... We have ONGC... What should we do?

Market will get up by 10% then these will increase by 10% only.

But on the other hand if market stoops up by 10% then Kotak will be up by 30% and this is the speciality of high beta stocks.

Never go for selling of high beta stocks.

Some people sell option of PVR, Indigo, Muthoot Finance and even of UPL.

The beta of these stocks are so high that the break 10-12-15% in a day.

So there is a saying that option sellers are always winners, but that's not necessary. Along with option selling, we need to know which stocks we should have our hands on.

They can be high beta or low beta stocks.

So those who want to be in sell in options will always sell PUT and not CE.

They will not sell CALL.

Second aspect, if someone can see clear-cut 1000 plus or 1000 minus in NIFTY,

and they are risky/aggressive players, then

these players suppose earn Rs 5 in low beta stocks then they can earn Rs 50 in high beta stocks.

So it was a small video. many people must be aware of the our topic and many might not be.

If you liked the video, then

Thank you very much.