Hedging Strategy with Derivatives

Purpose of this blog is to invite discussions on what can be the best trading strategy....

Let's say I am expecting market to go bullish in one month on a perticular stock 'X'.

Current price of stock 'X' is INR 100.

Strategy 1 :

I'll buy 100 'X' at 150 on month end - future contract ( Cost : 250 INR )
I'll may sell 100'X' at 155 on month end - option ( Cost: 250 INR )

* Scenario 1 : On month end - price of 'X' is INR 170.

1. Exercise future and buy 100 'X' at 150.
2. Sell these'X' at 170 and make profit of 2000.
3. Subtract cost of future and option from profit ( 2000 - 500 ) - 1500 net profit.

** Scenario 2 : On month end - price of 'X' is INR 130.

1. Exercise future and buy 100 rpl at 150
2. Exercise option and sell 100 rpl at 155
3. No Profit No Loss.


Stretegy 2 :

If I am expecting market to go bearish, I'll sell 100 'X' for 150 on month end ( future ) and
I'll may buy 100 'X' on month end at 145 ( option ).


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Thoughts on these strategies ? What are the pros and cons ? Any better ideas ???