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Derivatives (Futures & Options)

A PROJECT REPORT ON DERIVATIVES (FUTURES & OPTIONS)


FOR KOTAK SECURITIES PVT. LTD. Submitted in partial fulfillment for the requirement of summer internship for the award of Masters in Business Administration BY Sirisha.p ---------------2007-2009

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Derivatives (Futures & Options)

CHAPTER-I

Introduction Objectives Scope Research Methodology Limitations

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OBJECTIVES OF THE STUDY To analyze the derivatives market in India. To analyze the operations of futures and options. To find the profit/loss position of futures buyer and also The option writer and option holder.

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SCOPE OF THE STUDY The Study is limited to Derivatives with special reference to futures and Option in the Indian context and the Inter-Connected Stock Exchange have been Taken as a representative sample for the study. The study cant be said as totally perfect. Any alteration may come. The study has only made a humble Attempt at evaluation derivatives market only in India context. The study is not Based on the international perspective of derivatives markets, which exists in NASDAQ, CBOT etc.,

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RESEARCH METHODOLOGY:
The type of research is selected on the basis of problems identified. Here the research type used is descriptive research. Descriptive research includes factfindings and enquiries of different kinds. The major purpose of descriptive research is a description of the state of affairs, as it exists in the present system. In this dissertation an attempt has been made to discover various issues related to derivatives in the Indian market and how they help the hedge the risk.

ACTUAL COLLECTION OF DATA


Data Collection from secondary Sources Secondary data were gathered from numerous sources. While preparation of this project report, the secondary data have been collected through: Data was generated from general library research sources, textbooks, trade journals, articles from newspaper, treasury management, brochures, interviews with different brokers of Bangalore stock Exchange and Internet web site

Period of study
The study on Derivatives is conducted from February 16, 2009 to February 20, 2009.

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Limitations of the study


The study is conducted in HYDERABAD only. Since the study covers the overview of derivatives market, it cannot be generalized. Data collected is only from secondary sources.

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Futures Options Trading

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INTRODUCTION OF DERIVATIVES The emergence of the market for derivative products, most notably forwards, futures and options, can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, the financial markets are marked by a very high degree of volatility. Through the use of derivative products, it is possible to partially or fully transfer price risks by locking-in asset Prices. As instruments of risk management, these generally do not influence the Fluctuations in the underlying asset prices. However, by lockingin asset prices, Derivative products minimize the impact of fluctuations in asset prices on the Profitability and cash flow situation of risk-averse investors. Derivatives are risk management instruments, which derive their value from an underlying asset. The underlying asset can be bullion, index, share, bonds, Currency, interest, etc., Banks, Securities firms, companies and investors to hedge risks, to gain access to cheaper money and to make profit, use derivatives. Derivatives are likely to grow even at a faster rate in future.

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DEFINITION OF DERIVATIVES Derivative is a product whose value is derived from the value of an underlying asset in a contractual manner. The underlying asset can be equity, Forex, commodity or any other asset.
Securities Contract ( regulation) Act, 1956 (SC(R) A)defines debt

instrument, share, loan whether secured or unsecured, risk instrument or contract for differences or any other form of security A contract which derives its value from the prices, or index of prices, of underlying securities.

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HISTORY OF DERIVATIVES MARKETS Early forward contracts in the US addressed merchants concerns about ensuring that there were buyers and sellers for commodities. However credit risk remained a serious problem. To deal with this problem, a group of Chicago; businessmen formed the Chicago Board of Trade (CBOT) in 1848. The primary intention of the CBOT was to provide a centralized location known In advance for buyers and sellers to negotiate forward contracts. In 1865, the CBOT went one step further and listed the first exchange traded derivatives Contract in the US; these contracts were called futures contracts. In 1919, Chicago Butter and Egg Board, a spin-off CBOT was reorganized to allow futures trading. Its name was changed to Chicago Mercantile Exchange (CME). The CBOT and the CME remain the two largest organized futures exchanges, indeed the two largest financial exchanges of any kind in the world today. The first stock index futures contract was traded at Kansas City Board of Trade. Currently the most popular stock index futures contract in the world is based on S&P 500 index, traded on Chicago Mercantile Exchange. During the Mid eighties, financial futures became the most active derivative instruments Generating volumes many times more than the commodity futures. Index futures, futures on T-bills and Euro-Dollar futures are the three most popular Futures contracts traded today. Other popular international exchanges that trade derivatives are LIFFE in England, DTB in Germany, SGX in Singapore, TIFFE in Japan, MATIF in France, Eurex etc.,

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THE GROWTH OF DERIVATIVES MARKET Over the last three decades, the derivatives markets have seen a phenomenal growth. A large variety of derivative contracts have been launched at exchanges across the world. Some of the factors driving the growth of financial derivatives are: Increased volatility in asset prices in financial markets, Increased integration of national financial markets with the international markets, Marked improvement in communication facilities and sharp decline in their costs, Development of more sophisticated risk management tools, providing economic agents a wider choice of risk management strategies, and Innovations in the derivatives markets, which optimally combine the risks and returns over a large number of financial assets leading to higher returns, reduced risk as well as transactions costs as compared to individual financial assets.

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DERIVATIVE PRODUCTS (TYPES) The following are the various types of derivatives. They are: Forwards: A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price. Futures: A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Futures contracts are special types of forward contracts in the sense that the former are standardized exchangetraded contracts. Options: Options are of two types-calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date. Warrants: Options generally have lives of upto one year; the majority of options traded on options exchanges having a maximum maturity of nine months. Longer-dated options are called warrants and are generally traded Over-the-counter.

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Leaps: The acronym LEAPS means Long-Term Equity Anticipation Securities. These are options having a maturity of upto three years. Baskets: Basket options are options on portfolio of underlying assets. The underlying asset is usually a moving average of a basket of assets. Equity index options are a form of basket options. Swaps: Swaps are private agreement between two parties to exchange cash flows in the future according to a prearranged formula. They can be regarded as portfolios of forward contracts.

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PARTICIPANTS IN THE DERRIVATIVES MARKETS The following three broad categories of participants: HEDGERS: Hedgers face risk associated with the price of an asset. They use futures or options markets to reduce or eliminate this risk. SPECULATORS: Speculators wish to bet on future movements in the price of an asset. Futures and options contracts can give them an extra leverage; that is, they can increase both the potential gains and potential losses in a speculative venture. ARBITRAGEURS: Arbitrageurs are in business to take advantage of a discrepancy between prices in two different markets. If, for example they see the futures prices of an asset getting out of line with the cash price, they will take offsetting positions in the two markets to lock in a profit.

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FUNCTIONS OF THE DERIVATIVES MARKET In spite of the fear and criticism with which the derivative markets are commonly looked at, these markets perform a number of economic functions. Price in an organized derivative markets reflect the perception of market participants about the future and lead the prices of underlying to the perceived future level. The prices of derivatives converge with the prices of the underlying at the Expiration of the derivative contract. Thus derivatives help in discovery of future as well as current prices. The derivative markets helps to transfer risks from those who have them but may not like them to those who have an appetite for them. Derivative due to their inherent nature, are linked to the underlying cash markets. With the introduction of derivatives, the underlying market witness higher trading volumes because of participation by more players who would not otherwise participate for lack of an arrangement to transfer risk. Speculative trades shift to a more controlled environment of derivatives market. In the absence of an organized derivatives market, speculators trade in the underlying cash markets. Margining, monitoring and surveillance of the activities of various participants become extremely difficult in these kinds of mixed markets.

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INTRODUCTION OF FUTURES Futures markets were designed to solve the problems that exist in forward markets. A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. But unlike forward contract, the futures contracts are standardized and exchange traded. To facilitate liquidity in the futures contract, the exchange specifies certain standard features of the contract. It is standardized contract with standard underlying instrument, a standard quantity and quality of the underlying instrument that can be delivered, (Or which can be used for reference purpose in settlement) and a standard timing of such settlement. A futures contract may be offset prior to maturity by entering into an equal and opposite transaction. More than 90% of futures transactions are offset this way. The standardized items in a futures contract are: Quantity of the underlying Quality of the underlying The date and the month of delivery The units of price quotation and minimum price change Location of settlement

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DEFINATION A Futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts. HISTORY OF FUTURES Merton Miller, the 1990 Nobel Laureate had said that financial futures represent the most significant financial innovation of the last twenty years. The first exchange that traded financial derivatives was launched in Chicago in the year 1972. A division of the Chicago Mercantile Exchange, it was called the international monetary market (IMM) and traded currency futures. The brain behind this was a man called Leo Melamed, acknowledged as the father of financial futures who was then the Chairman of the Chicago Mercantile Exchange. Before IMM opened in 1972, the Chicago Mercantile Exchange sold contracts whose value was counted in millions. By 1990, the underlying value of all contracts traded at the Chicago Mercantile Exchange totaled 50 trillion dollars. These currency futures paved the way for the successful marketing of a dizzying array of similar products at the Chicago Mercantile Exchange, the Chicago Board of Trade and the Chicago Board Options Exchange. By the 1990s, these exchanges were trading futures and options on everything from

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Asian and American stock indexes to interest-rate swaps, and their success transformed Chicago almost overnight into the risk-transfer capital of the world.

DISTINCTION BETWEEN FUTURES AND FORWARDS CONTRACTS Forward contracts are often confused with futures contracts. The confusion is primarily because both serve essentially the same economic functions of allocating risk in the presence of futures price uncertainty. However futures are a significant improvement over the forward contracts as they eliminate counterparty risk and offer more liquidity. Comparison between two as follows:

FUTURES 1.Trade on 2.Standardized contract terms 3. hence more liquid 4. Requires margin payment 5. Follows daily Settlement

FORWARDS an 1. OTC in nature 2.Customized contract terms 3. hence less liquid 4. No margin payment 5. Settlement at end of period happens

Organized Exchange

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Table 3.1

FEATURES OF FUTURES Futures are highly standardized. The contracting parties need not pay any down payment. Hedging of price risks. They have secondary markets to. TYPES OF FUTURES On the basis of the underlying asset they derive, the futures are divided into two types: Stock Futures Index Futures PARTIES IN THE FUTURES CONTRACT There are two parties in a futures contract, the buyers and the seller. The buyer of the futures contract is one who is LONG on the futures contract and the seller of the futures contract is who is SHORT on the futures contract. The pay-off for the buyers and the seller of the futures of the contracts are as follows:

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PAY-OFF FOR A BUYER OF FUTURES

PROFIT

LOSS

Figure 3.2

CASE 1:- The buyers bought the futures contract at (F); if the futures Price Goes to E1 then the buyer gets the profit of (FP). CASE 2:- The buyers gets loss when the futures price less then (F); if The Futures price goes to E2 then the buyer the loss of (FL).

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PAY-OFF FOR A SELLER OF FUTURES

P PROFIT

E E

F LOSS L

Figure 3.3 F = FUTURES PRICE E1, E2 = SATTLEMENT PRICE


CASE 1:- The seller sold the future contract at (F); if the future goes to E1 Then the seller gets the profit of (FP). CASE 2:- The seller gets loss when the future price goes greater than (F); If the future price goes to E2 then the seller get the loss of (FL).

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MARGINS
Margins are the deposits which reduce counter party risk, arise in a futures contract. These margins are collect in order to eliminate the counter party risk. There are three types of margins: Initial Margins:Whenever a future contract is signed, both buyer and seller are required to post initial margins. Both buyers and seller are required to make security deposits that are intended to guarantee that they will infect be able to fulfill their obligation. These deposits are initial margins and they are often referred as purchase price of futures contract. Mark to market margins:The process of adjusting the equity in an investors account in order to reflect the change in the settlement price of futures contract is known as MTM margin. Maintenance margin:The investor must keep the futures account equity equal to or grater than certain percentage of the amount deposited as initial margin. If the equity goes less than that percentage of initial margin, then the investor receives a call for an additional deposit of cash known as maintenance margin to bring the equity up to the initial margin. ROLE OF MARGINS The role of margins in the futures contract is explained in the following example: Siva Rama Krishna sold an ONGC July futures contract to Nagesh at Rs.600; the following table shows the effect of margins on the Contract. The contract size of ONGC is 1800. The initial margin amount is say Rs. 30,000 the maintenance margin is 65% of initial margin.

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PRICING FUTURES Pricing of futures contract is very simple. Using the cost-of-carry logic, we calculate the fair value of a future contract. Every time the observed price deviates from the fair value, arbitragers would enter into trades to captures the arbitrage profit. This in turn would push the futures price back to its fair value. The cost of carry model used for pricing futures is given below. F = SerT Where: F S r T e = = = = = Futures price Spot Price of the Underlying Cost of financing (using continuously compounded Interest rate) Time till expiration in years 2.71828 (OR) F = S (1+r- q) t Where: F S r q t = = = = = Futures price Spot price of the underlying Cost of financing (or) interest Rate Expected dividend yield Holding Period

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FUTURES TERMINOLOGY Spot price: The price at which an asset trades in the spot market. Futures Price: The price at which the futures contract trades in the futures market. Contract cycle: The period over which a contract trades. The index futures contracts on the NSE have one-month and three-month expiry cycles which expire on the last Thursday of the month. Thus a January expiration contract expires on the last Thursday of January and a February expiration contract ceases trading on the last Thursday of February. On the Friday following the last Thursday, a new contract having a three-month expiry is introduced for trading. Expiry date: It is the date specified in the futures contract. This is the last day on which the contract will be traded, at the end of which it will cease to exist. Contract size: The amount of asset that has to be delivered under one contract. For instance, the contract size on NSEs futures markets is 200 Nifties. Basis: In the context of financial futures, basis can be defined as the futures price minus the spot price. These will be a different basis for each delivery month for each contract. In a normal market, basis will be positive. This reflects that futures prices normally exceed spot prices.

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Cost of carry: The relationship between futures prices and spot prices can be summarized in terms of what is known as the cost of carry. This measures the storage cost plus the interest that is paid to finance the asset less the income earned on the asset. Initial margin: The amount that must be deposited in the margin account at the time a futures contract is first entered into is known as initial margin. Marking-to-market: In the futures market, at the end of each trading day, the margin account is adjusted to reflect the investors gain or loss depending upon the futures closing price. This is called marking-to-market. Maintenance margin: This is some what lower than the initial margin. This is set to ensure that the balance in the margin account never becomes negative. If the balance in the margin account falls below the maintenance margin, the investor receives a margin call and is expected to top up the margin account to the initial margin level before trading commences on the next day.

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INTRODUCTION TO OPTIONS In this section, we look at the next derivative product to be traded on the NSE, namely options. Options are fundamentally different from forward and futures contracts. An option gives the holder of the option the right to do something. The holder does not have to exercise this right. In contrast, in a forward or futures contract, the two parties have committed themselves to doing something. Whereas it costs nothing (except margin requirement) to enter into a futures contracts, the purchase of an option requires as up-front payment. DEFINITION Options are of two types- calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyers the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date. HISTORY OF OPTIONS Although options have existed for a long time, they wee traded OTC, without much knowledge of valuation. The first trading in options began in Europe and the US as early as the seventeenth century. It was only in the early 1900s that a group of firms set up what was known as the put and call Brokers and Dealers Association with the aim of providing a mechanism for bringing buyers and sellers together. If someone wanted to buy an option, he or she would contact one of the member firms. The firms would then attempt to find a seller or writer of the option either from its own clients of those of other member firms. If no seller could be found, the firm would undertake to write the option itself in return for a price.

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This market however suffered form two deficiencies. First, there was no secondary market and second, there was no mechanism to guarantee that the writer of the option would honor the contract. In 1973, Black, Merton and scholes invented the famed Black-Scholes formula. In April 1973, CBOE was set up specifically for the purpose of trading options. The market for option developed so rapidly that by early 80s, the number of shares underlying the option contract sold each day exceeded the daily volume of shares traded on the NYSE. Since then, there has been no looking back. Option made their first major mark in financial history during the tulip-bulb mania in seventeenth-century Holland. It was one of the most spectacular get rich quick binges in history. The first tulip was brought Into Holland by a botany professor from Vienna. Over a decade, the tulip became the most popular and expensive item in Dutch gardens. The more popular they became, the more Tulip bulb prices began rising. That was when options came into the picture. They were initially used for hedging. By purchasing a call option on tulip bulbs, a dealer who was committed to a sales contract could be assured of obtaining a fixed number of bulbs for a set price. Similarly, tulip-bulb growers could assure themselves of selling their bulbs at a set price by purchasing put options. Later, however, options were increasingly used by speculators who found that call options were an effective vehicle for obtaining maximum possible gains on investment. As long as tulip prices continued to skyrocket, a call buyer would realize returns far in excess of those that could be obtained by purchasing tulip bulbs themselves. The writers of the put options also prospered as bulb prices spiraled since writers were able to keep the premiums and the options were never exercised. The tulip-bulb market collapsed in 1636 and a lot of speculators lost huge sums of money. Hardest hit were put writers who were unable to meet their commitments to purchase Tulip bulbs.

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PROPERTIES OF OPTION Options have several unique properties that set them apart from other securities. The following are the properties of option: Limited Loss High leverages potential Limited Life PARTIES IN AN OPTION CONTRACT There are two participants in Option Contract. Buyer/Holder/Owner of an Option: The Buyer of an Option is the one who by paying the option premium buys the right but not the obligation to exercise his option on the seller/writer. Seller/writer of an Option: The writer of a call/put option is the one who receives the option premium and is thereby obliged to sell/buy the asset if the buyer exercises on him. TYPES OF OPTIONS The Options are classified into various types on the basis of various variables. The following are the various types of options. 1. On the basis of the underlying asset: On the basis of the underlying asset the option are divided in to two types: Index options: These options have the index as the underlying. Some options are while others are American. contracts are also cash settled. European Like index futures contracts, index options

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Stock options: Stock Options are options on individual stocks. Options currently trade on over 500 stocks in the United States. A contract gives the holder the right to buy or sell shares at the specified price. 2. On the basis of the market movements : On the basis of the market movements the option are divided into two types. They are: Call Option: A call Option gives the holder the right but not the obligation to buy an asset by a certain date for a certain price. It is brought by an investor when he seems that the stock price moves upwards. Put Option: A put option gives the holder the right but not the obligation to sell an asset by a certain date for a certain price. It is bought by an investor when he seems that the stock price moves downwards. 3. On the basis of exercise of option: On the basis of the exercise of the Option, the options are classified into two Categories. American Option: American options are options that can be exercised at any time up to the expiration date. Most exchange traded options are American. European Option: European options are options that can be exercised only on the expiration date itself. European options are easier to analyze than American options, and

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properties of an American option are frequently deduced from those of its European counterpart. PAY-OFF PROFILE FOR BUYER OF A CALL OPTION The Pay-off of a buyer options depends on a spot price of an underlying asset. The following graph shows the pay-off of buyers of a call option.

PROFIT ITM

S ATM E
1

OTM

LOSS

Figure 3.4
S = Strike price ITM = In the Money Sp = premium/loss ATM = At the Money E1 = Spot price 1 OTM = Out of the Money E2 = Spot price 2 SR = Profit at spot price E1 CASE 1: (Spot Price > Strike price) As the Spot price (E1) of the underlying asset is more than strike price (S). The buyer gets profit of (SR), if price increases more than E1 then profit also increase more than (SR) CASE 2: (Spot Price < Strike Price) As a spot price (E2) of the underlying asset is less than strike price (S)

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The buyer gets loss of (SP); if price goes down less than E2 then also his loss is limited to his premium (SP) PAY-OFF PROFILE FOR SELLER OF A CALL OPTION The pay-off of seller of the call option depends on the spot price of the underlying asset. The following graph shows the pay-off of seller of a call option:

PROFIT P

ITM

ATM

S OTM

R LOSS

Figure 3.5
S = Strike price SP = Premium / profit E1 = Spot Price 1 E2 = Spot Price 2 SR = loss at spot price E2 ITM = In the Money ATM = At The money OTM = Out of the Money

CASE 1: (Spot price < Strike price) As the spot price (E1) of the underlying is less than strike price (S). The seller gets the profit of (SP), if the price decreases less than E1 then also profit of the seller does not exceed (SP). CASE 2: (Spot price > Strike price)

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As the spot price (E2) of the underlying asset is more than strike price (S) the Seller gets loss of (SR), if price goes more than E2 then the loss of the seller also increase more than (SR). PAY-OFF PROFILE FOR BUYER OF A PUT OPTION The Pay-off of the buyer of the option depends on the spot price of the underlying asset. The following graph shows the pay-off of the buyer of a call option.

PROFIT ITM

S E ATM
1

OTM

LOSS

Figure 3.6
S = Strike price ITM = In the Money SP = Premium / loss ATM = At the Money E1 = Spot price 1 OTM = Out of the Money E2 = Spot price 2 SR = Profit at spot price E1 CASE 1: (Spot price < Strike price) As the spot price (E1) of the underlying asset is less than strike price (S). The buyer gets the profit (SR), if price decreases less than E 1 then profit also increases more than (SR). CASE 2: (Spot price > Strike price)

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As the spot price (E2) of the underlying asset is more than strike price (S), The buyer gets loss of (SP), if price goes more than E2 than the loss of the buyer is limited to his premium (SP). PAY-OFF PROFILE FOR SELLER OF A PUT OPTION The pay-off of a seller of the option depends on the spot price of the underlying asset. The following graph shows the pay-off of seller of a put option.

PROFIT P ITM E
1

ATM S R LOSS E
2

OTM

Figure 3.7
S = Strike price SP = Premium/profit E1 = Spot price 1 E2 = Spot price 2 SR = Loss at spot price E1 ITM = In the Money ATM = At the Money OTM = Out of the Money

CASE 1: (Spot price < Strike price) As the spot price (E1) of the underlying asset is less than strike price (S), the seller gets the loss of (SR), if price decreases less than E 1 than the loss also increases more than (SR). CASE 2: (Spot price > Strike price)

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As the spot price (E2) of the underlying asset is more than strike price (S), the seller gets profit of (SP), of price goes more than E 2 than the profit of seller is limited to his premium (SP).

FACTORS AFFECTING THE PRICE OF AN OPTION The following are the various factors that affect the price of an option they are: Stock Price: The pay-off from a call option is an amount by which the stock price exceeds the strike price. Call options therefore become more valuable as the stock price increases and vice versa. The pay-off from a put option is the amount; by which the strike price exceeds the stock price. Put options therefore become more valuable as the stock price increases and vice versa. Strike price: In case of a call, as a strike price increases, the stock price has to make a larger upward move for the option to go in-the money. Therefore, for a call, as the strike price increases option becomes less valuable and as strike price decreases, option become more valuable. Time to expiration: Both put and call American options become more valuable as a time to expiration increases. Volatility: The volatility of a stock price is measured of uncertain about future stock price movements. As volatility increases, the chance that the stock will do very well or very poor increases. The value of both calls and puts therefore increases as volatility increase.

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Risk- free interest rate: The put option prices decline as the risk-free rate increases where as the price of call always increases as the risk-free interest rate increases. Dividends:Dividends have the effect of reducing the stock price on the Xdividend rate. This has a negative effect on the value of call options and a positive effect on the value of put options. PRICING OPTIONS An option buyer has the right but not the obligation to exercise on the seller. The worst that can happen to a buyer is the loss of the premium paid by him. His downside is limited to this premium, but his upside is potentially unlimited. This optionality is precious and has a value, which is expressed in terms of the option price. Just like in other free markets, it is the supply and demand in the secondary market that drives the price of an option. There are various models which help us get close to the true price of an option. Most of these are variants of the celebrated Black- Scholes model for pricing European options. Today most calculators and spread-sheets come with a built-in Black- Scholes options pricing formula so to price options we dont really need to memorize the formula. All we need to know is the variables that go into the model.

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The Black-Scholes formulas for the price of European calls and puts on a non-dividend paying stock are:

Call option CA = SN (d1) Xe- rT N (d2) Put Option PA = Xe- rT N (- d2) SN (- d1) Where d1 = ln (S/X) + (r + v2/2) T vT And d2 = d1 - vT Where CA = VALUE OF CALL OPTION PA = VALUE OF PUT OPTION S = SPOT PRICE OF STOCK N = NORMAL DISTRIBUTION VARIANCE (V) = VOLATILITY X = STRIKE PRICE r = ANNUAL RISK FREE RETURN T = CONTRACT CYCLE e = 2.71828 r = ln (1 + r)

Table 3.8

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OPTIONS TERMINOLOGY Option price/premium: Option price is the price which the option buyer pays to the option seller. It is also referred to as the option premium. Expiration date: The date specified in the options contract is known as the expiration date, the exercise date, the strike date or the maturity. Strike price: The price specified in the option contract is known as the strike price or the exercise price. DISTINCTION BETWEEN FUTURES AND OPTIONS FUTURES 1. Exchange traded, with Novation Exchange defines the product Price is zero, strike price moves Price is Zero Linear payoff Both long and short at risk OPTIONS 1. Same as futures 2. Same as futures 3. Strike price is fixed, price moves 4. Price is always positive 5. Nonlinear payoff 6. Only short at risk

2. 3. 4. 5. 6.

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Table 3.9

CALL OPTION
PREMIUM STRIKE PRICE INTRINSIC VALUE TIME VALUE TOTAL VALUE CONTRACT OUT OF THE MONEY AT THE MONEY IN THE MONEY

560 540 520 500 480 460 440

0 0 0 0 20 40 60

2 5 10 15 10 5 2

2 5 10 15 30 45 62

Table 3.10 PUT OPTION


PREMIUM INTRINSIC VALUE TIME VALUE TOTAL VALUE

STRIKE PRICE

CONTRACT

560 540 520 500

60 40 20 0

2 5 10 15

62 45 30 15

IN THE MONEY AT THE MONEY

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480 460 440

0 0 0

10 5 2

10 5 2

OUT OF THE MONEY

Table 3.11 PREMIUM = INTRINSIC VALUE + TIME VALUE The difference between strike values is called interval

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TRADING INTRODUCTION The futures & Options trading system of NSE, called NEAT-F&O trading system, provides a fully automated screen-based trading for Nifty futures & options and stock futures & Options on a nationwide basis as well as an online monitoring and surveillance mechanism. It supports an order driven market and provides complete transparency of trading operations. It is similar to that of trading of equities in the cash market segment. The software for the F&O market has been developed to facilitate efficient and transparent trading in futures and options instruments. Keeping in view the familiarity of trading members with the current capital market trading system, modifications have been performed in the existing capital market trading system so as to make it suitable for trading futures and options. On starting NEAT (National Exchange for Automatic Trading) Application, the log on (Pass Word) Screen Appears with the Following Details. 1) User ID 2) Trading Member ID 3) Password NEAT CM (default Pass word) 4) New Pass Word Note: - 1) User ID is a Unique

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2) Trading Member ID is Unique & Function; it is Common for all user of the Trading Member 3) New password Minimum 6 Characteristic, Maximum 8 characteristics only 3 attempts are accepted by the user to enter the password to open the Screen 4) If password is forgotten the User required to inform the Exchange in writing to reset the Password. BASKET TRADING SYSTEM 1) Taking advantage for easy arbitration between future market and & cash market difference, NSE introduce basket trading system by off setting positions through off line-order-entry facility. 2) Orders are created for a selected portfolio to the ratio of their market Capitalization from 1 lake to 30 crores.
1) Offline-order-entry facility: - generate order file in as specified format

out side the system & up load the order file in to the system by invoking this facility in Basket trading system.

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TRADING NETWORK

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HUB ANTENNA

SATELLITE

NSE MAIN FRAME


BROKERS PREMISES

Figure 3.12
Participants in Security Market 1) Stock Exchange (registered in SEBI)-23 Stock Exchanges

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2) 3) 4) 5)

Depositaries (NSDL,CDSL)-2 Depositaries Listed Securities-9,413 Registered Brokers-9,519 FIIs-502

Highest Investor Population


State Maharastra Gujarat Delhi Tamilnadu West Bangal Andhra Pradesh Total No. Investors 9.11 Lakhs 5.36 Lakhs 3.25 Lakhs 2.30 Lakhs 2.14 Lakhs 1.94 Lakhs % of Investors in India 28.50 16.75 10.10% 7.205 6.75% 6.05%

Table 3.13

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CHAPTER-III

COMPANY PROFILE

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The Kotak Mahindra Group


Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporate. The group has a net worth of around Rs. 3,100 crore, employs around 9,600 people in its various businesses and has a distribution network of branches, franchisees, representative offices and satellite offices across 300 cities and towns in India and offices in New York, London, Dubai and Mauritius. The Group services around 2.2 million customer accounts.

Group Management
Mr. Uday Kotak Mr. Shivaji Dam Mr. C. Jayaram Mr. Dipak Gupta Executive Vice Chairman & Managing Director

The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. This company was promoted by Uday Kotak, Sidney A. A. Pinto and Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when the company changed its name to Kotak Mahindra Finance Limited. Since then it's been a steady and confident journey to growth and success 1986 1987 Kotak Mahindra Finance Limited starts the activity of Bill Discounting Kotak Mahindra Finance Limited enters the Lease and Hire Purchase

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1990 1991 1992 1995

1996

1998

2000

2001 2003 2004 2005 2006

market The Auto Finance division is started The Investment Banking Division is started. Takes over FICOM, one of India's largest financial retail marketing networks Enters the Funds Syndication sector Brokerage and Distribution businesses incorporated into a separate company - Kotak Securities. Investment Banking division incorporated into a separate company - Kotak Mahindra Capital Company The Auto Finance Business is hived off into a separate company - Kotak Mahindra Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra Limited, for financing Ford vehicles. The launch of Matrix Information Services Limited marks the Group's entry into information distribution. Enters the mutual fund market with the launch of Kotak Mahindra Asset Management Company. Kotak Mahindra ties up with Old Mutual plc. For the Life Insurance business. Kotak Securities launches its on-line broking site (now www.kotaksecurities.com). Commencement of private equity activity through setting up of Kotak Mahindra Venture Capital Fund. Matrix sold to Friday Corporation Launches Insurance Services Kotak Mahindra Finance Ltd. converts to a commercial bank - the first Indian company to do so. Launches India Growth Fund, a private equity fund. Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime (formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Kotak Mahindra. Launches a real estate fund Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company and Kotak Securities

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COMPANY PRODUCTS Kotak Mahindra Bank At Kotak Mahindra Bank, we address the entire spectrum of financial needs for individuals and corporate. We have the products, the experience, the infrastructure and most importantly the commitment to deliver pragmatic, endto-end solutions that really work. Kotak Mahindra Old Mutual Life Insurance is a 76:24 joint venture between Kotak Mahindra Bank Ltd. and Old Mutual plc. Kotak Mahindra Old Mutual Life Insurance is one of the fastest growing insurance companies in India and has shown remarkable growth since its inception in 2001. Old Mutual, a company with 160 years experience in life insurance, is an international financial services group listed on the London Stock Exchange and included in the FTSE 100 list of companies, with assets under management worth $ 400 Billion as on 30th June, 2006. For customers, this joint venture translates into a company that combines international expertise with the understanding of the local market Car Finance Kotak Mahindra Prime Limited (KMPL) is a subsidiary of Kotak Mahindra Bank Limited formed to finance all passenger vehicles. The company is dedicated to financing and supporting automotive and automotive related manufacturers, dealers and retail customers.The Company offers car financing

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in the form of loans for the entire range of passenger cars and multi utility vehicles. The Company also offers Inventory funding to car dealers and has entered into strategic arrangement with various car manufacturers in India for being their preferred financier Kotak Securities Ltd. Kotak Securities Ltd. is India's leading stock broking house with a market share of around 8.5 % as on 31st March. Kotak Securities Ltd. has been the largest in IPO distribution. The accolades that Kotak Securities has been graced with include:

Prime Ranking Award (2003-04) - Largest Distributor of IPO's Finance Asia Award (2004) - India's best Equity House Finance Asia Award (2005)-Best Broker in India Euro money Award (2005)-Best Equities House in India Finance Asia Award (2006) - Best Broker in India Euro money Award (2006) - Best Provider of Portfolio Management: Equities

Kotak Securities Ltd - Institutional Equities Kotak Securities, a subsidiary of Kotak Mahindra Bank, is the stock-broking and distribution arm of the Kotak Mahindra Group. The institutional business division primarily covers secondary market broking. It caters to the needs of foreign and Indian institutional investors in Indian equities (both local shares and GDRs). The division also has a comprehensive research cell with sect oral analysts covering all the major areas of the Indian economy. Kotak Mahindra Capital Company (KMCC) Kotak Mahindra Capital Company (KMCC) helps leading Indian corporations, banks, financial institutions and Government Companys access domestic and international capital markets. It has been a leader in the capital markets, having consistently led the league tables for lead management in the past five years, leading 16 of the 20 largest Indian offerings between fiscal 2000 and 2006. KMCC has the most current understanding of investor appetite, having been the leading book runner/lead manager in public equity offerings in the period FY 2002-06

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Kotak Mahindra International Kotak has wholly-owned subsidiaries with offices in Mauritius, London, Dubai and New York. These subsidiaries specialize in providing services to overseas investors seeking to invest into India. Investors can access the asset management capability of the international subsidiaries through funds domiciled in Mauritius. The international subsidiaries offer brokerage and asset management services to institutions and high net worth individuals based outside India through their range of offshore India funds, as well as through specific advisory and discretionary investment management mandates from institutional investors. The International subsidiaries also provide lead management and underwriting services in conjunction with Kotak Mahindra Capital Company with respect to the issuances of domestic Indian securities in the international marketplace. Offerings from the International subsidiaries Kotak Indian Growth Fund The fund aims to achieve capital appreciation by being invested in shares and equity-linked instruments of Indian companies. Kotak Indian Mid-Cap Fund The fund aims to achieve capital appreciation by being primarily invested in the shares and equity linked instruments of midcapitalization companies in India. Kotak Indian Life Sciences Fund The fund aims to achieve capital appreciation by being invested in shares and equity-linked instruments of Indian companies in the life sciences business. Kotak Indian Shariah Fund Kotak Indian Shariah Fund, an Indian Equity fund which endeavors to achieve capital appreciation by being invested in the shares and equity-linked instruments of companies which are Shariah compliant Indian Equity Fund of Funds the Portfolio endeavors to achieve capital appreciation by being substantially invested in the shares or units of Mutual Funds schemes that are either: i. Equity schemes investing predominantly in Indian equities. ii. Equity fund of funds schemes investing predominantly in units of other Mutual Fund schemes that invest mainly in Indian equities.

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LOT SIZES OF SELECTED COMPANIES FOR ANALYSIS

CODE ACC ARVIND MILLS BHEL 750

LOT SIZE

COMPANY NAME Associates Cement Companies Ltd. Arvind Mills Ltd. Bharat Heavy Electrical Ltd.

2150 300

The following tables explain about the table that took place in futures and options between 16/02/09 to 20/02/09. The table has various columns, which explains various factors involved in derivative trading.

Date the day on which the trading took place. Closing premium Premium for that day. Open interest- No. of options that did not get exercised. Traded Quantity No. of futures and options traded on that day. N.O.C No. of contracts traded on that day. Closing PriceThe price of the futures at the end of the trading day. Spot parities relation to dividends. Calculation of rate of return.

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ANLYSIS AND INTERPRETATION: FUTURES: Futures are legally binding agreement to buy or sell an asset at a certain time in the future at a certain price.

FORMULA: Fo = So (1+r-d)
T

So = closing price of a market on that day. r = Rate of return d = Dividend T = Time period FUTURES OF ACC CEMENTS Table: 1 Open Int ('000) 7146 Trd Qty N.O.C. ('000) 986 2781

Date dd/mm/yy 16 /02/09

High Rs

Low Rs

Close Rs

FO 88582.23

818.34 768.00 810.65

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Derivatives (Futures & Options)

17 /02/09 18 /02/09 19 /02/09 20 /02/09

812.45 712.60 755.95 698.30 589.80 591.40 691.00 598.50 616.85 827.00 790.50 806.20

7322 1800 8168 1785

1012 1943 891 1465

3482 2591 2270 1953

89881.33 89858.54 90154.83 90132.04

The above table has been given in the following graph. Picture 1

FUTURES PRICE OF ACC 90500 90000 89500 89000 88500 88000 87500

16 /02/09 17 /02/09 18 /02/09


1 FO

19 /02/09 20 /02/09

Source: The data has been collected BUSINESS

STANDARED(paper) and Online Trading of KOTAK SECURITIES. INTERPRETATION: It is observed from the above mentioned table that the future price (Fo) has increased tremendously due to increase in closing

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price, decrease in open interest and reduction in value and volume of futures.

FUTURES OF ARVIND MILLS Table 2 Date dd/mm/yy 16 17 18 19 20 /02/09 /02/09 /02/09 /02/09 /02/09 High Rs 100.40 95.10 96.65 96.70 96.70 Low Rs 97.40 92.25 94.85 95.10 94.50 Close Rs 98.00 94.90 96.25 95.95 95.45 Open Int ('000) 13360 10636 9129 5609 3038 Trd Qty ('000) 5334 3053 4444 3990 5771 N.O.C. 2481 1420 2067 1856 2684 FO 1515.3 1467.4 1488.3 1483.6 1475.9

The above table has been given in the following graph. Picture 2 FUTURES PRICE OF ARVIND MILLS 1520 1500 1480 1460 1440 Fo Source: 16 /02/09 17 /02/09 18 /02/09 19/02/09 20 /02/09

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The data has been collected BUSINESS STANDARDS (paper) and Online Trading of KOTAK SECURITIES. INTERPRETATION: The above graph shows that the future price (Fo) has been decrease due to decrease in closing price and decrease in open interest and it is observed that increase in volume and value. FUTURES OF BHEL Table 3 Date dd/mm/yy 16 17 18 19 20 /02/09 /02/09 /02/09 /02/09 /02/09 High Rs 2010.00 2057.00 2260.00 2335.00 2405.10 Low Rs 1978.00 1995.00 2038.00 2210.00 2300.00 Close Rs 2006.40 2024.75 2221.60 2223.10 2350.00 Open Int ('000) 2192 1586 1257 871 462 Trd Qty N.O.C. ('000) 988 3293 1405 4682 1508 5025 934 6147 1400 4667 FO 218768 212665 218096 222906 219881

The above table has been given in the following graph. Picture 3

FUTURE PRICE OF BHEL


225000 220000 215000 210000 205000 Fo 16 /02/09 17 /02/09 18 /02/09 19 /02/09 20 /02/09

Source:

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The data has been collected BUSINESS STANDARDS (paper) and Online Trading of KOTAK SECURITIES.

INTERPRETATION: From the above mentioned table it is observed that the future price (Fo) has shown fluctuation due to fluctuation in closing price and volume, value is increase and it is observed that open interest is decrease.

OPTIONS: Options are two types. They are CALL OPTION and PUT OPTION CALL OPTION : A Call option is bought by an investor when he seems that the stock price moves upwards. A call option gives the holder of the option the right but not the obligation to buy an asset by an certain date for a certain price. PUT OPTION : A Put option is bought by an investor when he seems that the stock price moves downwards. A put option gives the holder of the option the right but not the obligation to sell asset by an certain date for a certain price. Formula: Profit of the holder Premium* = (Spot Price Strike Price)

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(Lot Size) in case of call option. Profit of the holder = Premium* (Lost Size) in case of Put Option.

Source: The data has been collected through BUSINESS

STANDARDS (Paper) and Online Trading of KOTAK SECURITIES.

The following table of Net pay-off explain the profit/loss of option holder/writer of ACC for the week 16/02/2009 to

20/02/2009. PROFIT/LOSS POSITION OF CALL OPTION BUYER OF ACC

Table 1
S PO T PRI CE S TRI KE PRI CE PRE MI UM WH ETH ER E XE RC IS E D BUY ER S G AI N/ LO SS WE IT ER G AI N/ LO SS

818.34 818.34 818.34 818.34

800 820 840 860

27.00 10.45 5.30 1.90

YES YES NO NO

150.00 2737.50 -3975.00 -1425.00

-150.00 -2737.50 13875.00 26325.00

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P fit an L ss g ho th b yers ro d o rap f e u w stike p ith rice o call o tio f p n 4000 2000 0 -2000 -4000 -6000 1 2 3 4 BYR UES G IN S A /LO S S R EP IC T IK R E

Profit and Loss graph of the writer with stock price of call option
30000 20000 10000 0 -10000 1 2 3 4
h

STRIKE PRICE WEITER GAIN/LOSS

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PROFIT/LOSS POSITION OF PUT OPTION BUYER/WRITER OF ACC Table 2 SPOT PRICE 818.34 818.34 818.34 818.34 STRIKE PREMIUM WHETHER BUYERS WEITER PRICE EXERCISED GAIN/LOSS GAIN/LOSS 800 0.20 NO -150 150 820 2.40 NO -1800 1800 840 8.90 NO -6675 6675 860 12.00 YES 900 -900

P ftad os r p ot e ue r i n Ls g h f h Byr o a w Si e rc oPtO i n ih t k P e f u po t r i t


20 00 0 - 00 20 - 00 40 - 00 60 - 00 80 1 2 3 4 SR E R E TI PI K C BYR UES GI / OS A LS N

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Profit and Loss Graph of the Writer with Strike Price of Put Option
8000 6000 4000 2000 0 -2000 1 2 3 4 WEITER GAIN/LOSS STRIKE PRICE

INTERPERATATION: From the above graph it observed that the buyer get Profit when the Strike Price is less than the spot price and it is also observed that the writer get loss when the strike price is more than the spot price. The following table of Net pay-off explains the profit/loss of option holder/writer of ARAVIND MILL PROFIT/LOSS POSITION OF CALL OPTION BUYER/WRITER OF ARAVINDMILL

Table 3

SPOT PRICE 100.40 100.40

STRIKE WHETHER BUYERS WRITERS PRICE PREMIUM EXERCISED GAIN/LOSS GAIN/LOSS 85 12.50 YES 537.5 -537.5 90 8.30 YES 1182.5 -1182.5

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100.40 100.40

95 100

4.30 2.00

YES NO

3332.5 -4300

-3332.5 9137.5

Profit/Loss Graph of the Writer with Strike Price of Call Option 6000 4000 2000 0 -2000 -4000 1 2 3 4
STRIKE PRICE WRITERS GAIN/LOSS

Profit and Loss Graph of the Buyer with Strike Price of Call Option 4000 2000 0 -2000 -4000 -6000 1 2 3 4 STRIKE PRICE BUYERS GAIN/LOSS

PROFIT/LOSS POSITION OF PUT OPTION BUYER/WRITER OF ARVIND MILL Table 4 SPOT PRICE 100.40 100.40 STRIKE PREMIUM WHETHER BUYERS PRICE EXERCISED GAIN/LOSS 80 0.25 NO -537.5 85 0.05 NO -967.5 WRITERS GAIN/LOSS 537.5 967.5

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100.40 100.40 100.40

90 95 100

0.45 1.300 4.900

NO NO YES

-2795 -10535 5697.5

2795 10535 -5697.5

Profit/Loss graph of the Buyer with Strike Price Of Put Option 10000 5000 0 -5000 -10000 -15000 1 2 3 4 STRIKE PRICE BUYERS GAIN/LOSS

Profit/Loss Graph of the Writer with Strike Price of Put Option 15000 10000 5000 0 -5000 -10000 1 2 3 4
STRIKE PRICE WRITER'S GAIN/LOSS

INTERPRETATION: It is observed from the above mentioned tables that the strike price is less than the spot price the buyer will get profit and strike price is more than the spot price the buyer will get loss then obviously in case of writer it is vice-versa.

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The following table of Net pay-off explains the profit/loss of holder/writer of BHEL PROFIT/LOSS POSITION OF CALL OPTION BUYER/WRITER OF BHEL Table 5

SPOT PRICE 2010.00 2010.00 2010.00 2010.00 2010.00

STRIKE PREMIUM WHETHER PRICE EXERCISED 1830 25.00 YES 1860 40.00 YES 1890 19.00 NO 1920 10.00 NO 1980 20.00 NO

BUYERS GAIN/LOSS 5700 7800 -5700 -3000 -6000

WRITER'S GAIN/LOSS -5700 -7800 5700 3000 6000

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Profit/Loss of the Buyers with Strike Price of Call Option 10000 5000 0 -5000 -10000 1 2 3 4 5
STRIKE PR E IC BUYERS GAIN SS /LO

Profit/Loss graph of the Writer with Strike Price of Call Option 10000 5000 0 -5000 -10000 1 2 3 4 5
STRIKE PRICE WRITER'S GAIN/LOSS

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PROFIT/LOSS POSITION OF PUT OPTION BUYER/WRITER OF BHEL Table 6 SPOT STRIKE PREMIUM WHETHER BUYERS WRITER'S PRICE PRICE EXERCISED GAIN/LOSS GAIN/LOSS 1874.00 1800 20.00 NO -6000 6000 1874.00 1830 28.55 NO -8565 8565 1874.00 1860 31.00 NO -9300 9300

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P fit/L ss G hO B yers w S ro o rap f u ith trike P rice o P t f u O tio p n 5000 0 1 -5000 -10000 2 3

S IK PR E TR E IC B Y R G /LO S U E S AIN S

Po o sGa hO B y r w S ik Pic o P t r fit/L s r p f u e s ith tr e r e f u O tio p n 100 00 80 00 60 00 40 00 20 00 0 1 2 3


S R EP IC T IK R E W IT R G IN O S R E 'S A /L S

INTERPRETATION: From the above call option and put option tables it is observed that the writer get profit when the strike price is more than the spot price and the writer get loss when the strike price is less than the spot price and it is observed that the buyer it is viceversa.

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CALCULATION OF FUTURE PRICE On Feb 16 t h : If an investor holds the following contract of the Acc Future closing price=R.s.818.34 Equity share capital=R.s.179.58 Net profit=4446.20 Preference dividend=0 Dividends=0.07 r = Net profit-preference dividend Equity share capital r = 4446.20-0/179.58.00*100=2475.88 =818.34(1+2475.88-0.07) 3 = 818.34(15194.208) 3 =288582.23 On Feb 16 t h : If an investor holds the following contract of the Arvind mills Future closing price=R.s100.40 Equity share capital=R.s.195.38 Net profit=484.81 Preference dividend=0 *100

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Dividends=0.01

r = Net profit-preference dividend Equity share capital R = 484.18-0/195.38*100=248.14 = 100.40 (1+248.14-0.01) 3 =100.40 (1+248.13) 3 =11515.31 On Feb 16 t h : If an investor holds the following contract of the BHEL Future closing price=R.s.2010.40 Equity share capital=R.s.32500.00 Net profit=158163.56 Preference dividend=0 Dividends=0.08 r = Net profit preference dividend Equity share capital r = 158163.56-0/195.38*100=486.66 = 2010.40 (1+486.66-0.08) 3 = 2010.40487.58) 3 = 518768. *100 *100

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FINDINGS
The above analysis of futures and options of ACC, ARVINDMILLS and BHELhad shown a positive market in the week. The major factors that influence the futures and options market are the cash market, foreign institutional investor involvement, News related to the underlying asset, national and international markets, Researchers view etc. In cash market the profit/loss is limited but where in future and option an investor can enjoy unlimited profit/loss. It is recommended that SEBI should take measures in

improving awareness about the future and option market as it is launched very recently.

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At present scenario the derivatives market is increased to a great position. Its daily turnover reaches to the equal stage of cash market. The average daily turnover of the NSE in derivative is four lacks volume. The derivatives are mainly used for hedging purpose. In cash market the investor has to pay the total money, but in derivatives has to pay the premiums or margins, which are some percentage of the total money.

SUGGESTIONS
o In a bearish market it is suggested to an investor to opt for put option in order to minimize Profits. o In a bullish market it is suggested to an investor to apt for call option in order to maximize Profits. o It is suggested to an investor to keep in mind the time or expiry duration of futures and options contract before

trading. The lengthy time, the risk is low and profit making. The fewer time may be high risk and chances of loss making.

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o At present futures and options are traded on NSE. It is recommended to SEBI to take actions in trading of futures and options in other regional exchanges. o SEBI has to take further steps in the risk management mechanism. o Contract size should be minimized because small investors can not afford this much of huge premiums.

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BIBLIOGRAPHY WEBSITES
WWW.derivativesindia.com www.kotaksecurities.com www.nseindia.com www.bseindia.com

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BOOKS:
FINANCIAL MANAGEMENT DERIVATIVES CORE MODULE SAPM PRASANNA CHANDRA NCFM MATERIAL PRASANNA CHANDRA

JOURNALS :
FINANCIAL EXPRESS BUSINESS STANDARDS

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