What is a DJ Index Strategy

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What is a DJ Index Strategy

A DJ Index strategy is a portfolio of investments consisting of DJ Index options and the basket of shares making up the DJ Index.

A simple strategy consists of just a single DJ Index option.

A complex strategy consists of the purchase of a number of options, some of which we have bought and some of which we have written and also the DJ Index share basket.

Generally – all the options have the same exercise date.

The strategy ends on the exercise date of the options included with it.

There are a number of classic strategies.

Each of the strategies is suited to one of the DJ Index tracks.

The purpose of each of the strategies is to generate a profit from exact forecasting of the range where the DJ Index will be at the exercise date (the determining date),

while limiting the loss in case the forecast fails.

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The chances of succeeding increase, as a wider range is chosen (in other words, the DJ Index falls within the range), but on the other hand, if successful, the profit generated is lower.

Exactly in the same way as the casino game, the more we disperse our money over a larger number of squares so our chances of winning increase, but the amount distributed now decreases.

 

Note: As an alternative to purchasing the basket of shares, it is possible to purchase units in a mutual fund which invests its money in the shares that make up the DJ Index.

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