The shares of the Mid-cap company, which specialises in operating India’s largest online marketplaces for insurance and financial lending products, are in focus as they have crashed in the day’s trade on IRDAI’s proposals. In this article, let’s see how you could have made a staggering 90,000% return by capitalising on this stock’s crash.
With a market capitalisation of Rs. 59,472.98 crore in the day’s trade, the shares of PB Fintech Ltd have declined by upto 32 percent in the day’s trade, making a low of Rs. 1,285.20 compared to the previous close of Rs. 1,890.00.
Reason for PB Fintech’s Crash?
The Shares of PB Fintech, the parent company of Policybazaar, plunged 32 percent during Thursday’s trading session, touching an 18-month low after hitting back-to-back lower circuits intraday.
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The steep decline followed a proposal by the Insurance Regulatory and Development Authority of India (IRDAI) to overhaul insurance distribution economics, sparking concerns over the potential impact on PB Fintech’s revenue model and profitability.
What Does the IRDAI Draft Paper Include?
The Insurance Regulatory and Development Authority of India (IRDAI) has proposed structural reforms aimed at reducing insurance costs, expanding coverage among underserved segments, and supporting sustainable growth across the sector.
Key proposals in the draft paper include rationalising Expenses of Management (EoM), reintroducing segment-wise commission limits, prohibiting “dark patterns” to ensure transparent product and pricing disclosures without requiring personal details, and mandating the disclosure of commission rates in policy documents. The paper also proposes measures to streamline motor insurance.
The proposed distribution reforms further address the types of insurance products banks can sell, restrictions on incentives offered to agents, the involvement of Market Infrastructure Institutions (MIIs) in insurance distribution, and a ban on compulsory bundling of insurance products such as credit-life insurance.
Here’s How You Could Have Made 90,000% in a Day?
PB Fintech Ltd is a Futures & Options-listed company with no fixed price band, allowing its shares to experience significant intraday price movements based on market demand, supply, and investor sentiment, subject to applicable exchange trading rules.
Following negative news related to the Insurance Regulatory and Development Authority of India (IRDAI), PB Fintech’s shares declined 32 percent in a single session. As the stock is available for F&O trading and has no fixed price band, the sharp move could have created an opportunity for exceptionally high returns through leveraged derivative positions, potentially reaching up to 90,000 percent depending on the strategy and entry price.
Here’s how
The POLICYBZR 29 September Rs. 1,500 Put option was a deeply out-of-the-money option, meaning the stock was trading well above Rs. 1,500 when the option was purchased. The option becomes valuable at expiry only if the stock falls below Rs. 1,500.
In simple terms, this Put option gives the buyer the right to benefit from a fall in Policybazaar’s share price below Rs. 1,500 by expiry. The lower the stock falls below Rs. 1,500, the greater the potential value of the Put option, although the profit also depends on the premium paid.
If you bought the POLICYBZR 29 September Rs. 1,500 Put option at yesterday’s low of Rs. 0.30, one lot of 350 shares would have required an investment of just Rs. 105. As the premium surged to Rs. 262.40 during today’s trade, the value of the lot would have risen to Rs. 91,840.
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This means your initial capital of Rs. 105 could have grown to approximately Rs. 91,840, representing a gain of around 87,366.7 percent, before brokerage, taxes, and other applicable charges.
₹10,000 Investment could have become ₹88.17 lakh
If you had invested Rs. 10,000 in the POLICYBZR 29 September Rs. 1,500 Put option at yesterday’s low premium of Rs. 0.30, you could have purchased approximately 95 to 96 lots, requiring an investment of around Rs. 9,975 to Rs. 10,080. The investment could have increased significantly as the option premium surged during today’s trading session.
With 95 lots of the POLICYBZR 29 September Rs. 1,500 Put option at Rs. 0.30, your investment of Rs. 9,975 could have grown to approximately Rs. 87.25 lakh at a premium of Rs. 262.40. Similarly, an investment of Rs. 10,080 for 96 lots could have increased to approximately Rs. 88.17 lakh at the same premium of Rs. 262.40, before brokerage, taxes and other charges.