Derivatives (Futures and Options) - Sharekhan

Derivatives (Futures & Options)
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 locking-in 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.
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 exchange-traded
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.
Leaps:
The acronym LEAPS means Long-Term Equity Anticipation Securities. These are
options having a maturity of upto three years.
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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. The two commonly used swaps are:
Interest rate swaps:
The entail swapping only the interest related cash flows between the parties in the
same currency.
Currency swaps:
These entail swapping both principal and interest between the parties, with the
cashflows in one direction being in a different currency than those in the opposite
direction.
Swaptions:
Swaptions are options to buy or sell a swap that will become operative at the
expiry of the options. Thus a swaption is an option on a forward swap. Rather than
have calls and puts, the swaptions market has receiver swaptions and payer
swaptions. A receiver swaption is an option to receive fixed and pay floating. A
payer swaption is an option to pay fixed and received floating.
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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.
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.
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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.
An important incidental benefit that flows from derivatives trading is
that it acts as a catalyst for new entrepreneurial activity. The derivatives
have a history of attracting many bright, creative, Well-educated people
with an entrepreneurial attitude. They often energize others to create
new businesses, new products and new employment opportunities, the
benefit of which are immense.
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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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.
To study about risk management with the help of derivatives.
LIMITATIONS OF THE STUDY
The following are the limitation of this study.
The scrip chosen for analysis is OIL & NATURAL GAS
CORPORATION LTD and the contract taken is March 2007
ending one-month contract.
The data collected is completely restricted to the OIL &
NATURAL GAS CORPORATION LTD of March 2007; hence
this analysis cannot be taken universal.
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NATURE OF THE PROBLEM

The turnover of the stock exchange has been tremendously increasing form Last
10 years. The number of trades and the number of investors, who are participating,
have increased. The investors are willing to reduce their risk, so they are seeking
for the risk management tools.
Prior to SEBI abolishing the BADLA system, the investors had this system as a
source of reducing the risk, as it has many problems like no strong margining
System, unclear expiration date and generating counter party risk. In view of this
problem SEBI abolished the BADLA system.
After the abolition of the BADLA system, the investors are seeking for a
Hedging system, which could reduce their portfolio risk.
SEBI thought the
Introduction of the derivatives trading, as a first step it has set up a 24 member

Committee under the chairmanship of Dr.L.C.Gupta to develop the appropriate
Framework for derivatives trading in India, SEBI accepted the recommendation of
the committee on May 11, 1998 and approved the phase introduction of the
Derivatives trading beginning with stock index futures.
There are many investors who are willing to trade in the derivatives segment,
Because of its advantages like limited loss unlimited profit by paying the small
Premiums.
THE DEVELOPMENT OF DERIVATIVES MARKET
Holding portfolios of Securities is associated with the risk of the possibility that the
investor may realize his returns, which would be much lesser than what he
expected to get. There are various factors, which affect the returns:
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1. Price or dividend (interest)

2. Some are internal to the firm like
Industrial policy
Management capabilities
Consumers preference
Labor strike, etc.,
These forces are to a large extent controllable and are termed as non systematic
risks. An investor can easily manage such non-systematic by having a Welldiversified portfolio spread across the companies, industries and groups so that a
loss in one may easily be compensated with a gain in other.
There are yet other of influence which are external to the firm, cannot be
controlled and affect large number of securities. They are termed as systematic
Risk. They are:
1. Economic
2. political
3. Sociological changes are sources of systematic risk
For instance, inflation, interest rate, etc. Their effect is to cause prices if nearly
All-individual stocks to move together in the same manner. We therefore quite
often find stock prices falling from time to time in spite of companys earning
rising and vice versa.
Rational Behind the development of derivatives market is to manage this
systematic risk, liquidity in the sense of being able to buy and sell relatively large
amounts quickly without substantial price concession.
In debt market, a large position of the total risk of securities is systematic. Debt
instruments are also finite life securities with limited marketability due to their
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small size relative to many common sticks. Those factors favour for the purpose
of both portfolio hedging and speculation, the introduction of a derivatives
securities that is on some broader market rather than an individual security.
GLOBAL DERIVATIVES MARKET
The global financial centers such as Chicago, New York, Tokyo and London
dominate the trading in derivatives. Some of the worlds leading exchanges for the
exchange-traded derivatives are:
Chicago
Mercantile
exchange
(CME)
and
International Financial Futures Exchange (LIFFE)
London
( for
currency & Interest rate futures)

Philadelphia Stock Exchange(PSE), London Stock Exchange
(LSE) & Chicago Board Options Exchange (CBOE) ( for
currency options)
New York Stock Exchange (NYSE) and London Stock
Exchange (LSE) (for equity derivatives)
Chicago Mercantile Exchange(CME) and London Metal
Exchange (LME) ( for Commodities)
These exchanges account for a large portion of the trading volume in the respective
derivatives segment.
NSEs DERIVATIVES MARKET
The derivatives trading on the NSE commenced with S&P CNX Nifty index
Futures on June 12, 2000. The trading in index options commenced on June 4,
2001 and trading in options on individual securities commenced on July 2, 2001
Single stock futures were launched on November 9, 2001. Today, both in terms of
volume and turnover, NSE is the largest derivatives exchange in India. Currently,
the derivatives contracts have a maximum of 3-month expiration cycles. Three
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contracts are available for trading, with 1 month, 2 month and 3 month expiry.
A new contract is introduced on the next trading day following of the near month
contract.
REGULATORY FRAMEWORK
The trading of derivatives is governed by the provisions contained in the SC(R)
A, the SEBI Act, the rules and regulations framed there under and the rules and
bye-laws of stock exchanges.
In this chapter we look at the broad regulatory framework for derivatives
trading and the requirement to become a member and an authorized dealer of the
F&O segment and the position limits as they apply to various participants.
Regulation for derivatives trading:
SEBI set up a 24-members committee under the Chairmanship of
Dr.L.C.GUPTA to develop the appropriate regulatory framework for derivatives
trading in India. On May 11, 1998 SEBI accepted the recommendations of the
committee and approved the phased introduction of derivatives trading in India
beginning with stock index futures.
The provision in the SC(R) A and the regulatory framework developed there
under govern trading in securities. The amendment of the SC(R) A to include
derivatives within the ambit of securities in the SC(R) A made trading in
derivatives possible within the framework of that Act.
Any Exchange fulfilling the eligibility criteria as prescribed in the
L.C.Gupta committee report can apply to SEBI for grant of recognition
under Section 4 of the SC(R) A, 1956 to start trading derivatives. The
derivatives exchange/segment should have a separate governing council
and representation of trading/clearing members shall be limited to
maximum of 40% of the total members of the governing council. The
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exchange would have to regulate the sales practices of its members and
would have to obtain prior approval of SEBI before start of trading in
any derivative contract.
The Exchange should have minimum 50 members.
The members of an existing segment of the exchange would not
automatically become the members of derivative segment. The
members of the derivative segment would need to fulfill the eligibility
conditions as laid down by the L.C.Gupta committee.
The clearing and settlement of derivatives trades would be through a
SEBI
approved
clearing
corporation/house.
Clearing
corporations/houses complying with the eligibility as laid down by the

committee have to apply to SEBI for grant of approval.
Derivatives brokers/dealers and clearing members are required to seek
registration from SEBI. This is in addition to their registration as
brokers of existing stock exchanges. The minimum net worth for
clearing members of the derivatives clearing corporation/house shall be
Rs.300 Lakh. The net worth of the member shall be computed as
follows :
Capital + Free reserves
Less non-allowable assets viz.,
Fixed assets
Pledged securities
Members card
Non-allowable securities ( unlisted securities)
Bad deliveries
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Doubtful debts and advances

Prepaid expenses
Intangible assets
30 % marketable securities
The minimum contact value shall not be less than
Rs.2 Lakh. Exchanges have to submit details of the futures contract

they propose to introduce.
The initial margin requirement, exposure limits linked to capital
adequacy and margin demands related to the risk of loss on the
position will be prescribed by SEBI / Exchanged from time to time.
The L.C.Gupta committee report requires strict enforcement of
Know your customer rule and requires that every client shall be
registered with the derivatives broker. The members of the derivatives
segment are also required to make their clients aware of the risks
involved in derivatives trading by issuing to the clients the Risk
Disclosure and obtain a copy of the same duly signed by the clients.
The trading members are required to have qualified approved user and
sales person who have passed a certification programmed approved
by SEBI.
ELIGIBILITY OF ANY STOCK TO ENTER IN DERIVATIVES MARKET
Non Promoter holding ( free float capitalization ) not less than Rs.
750 Crores from last 6 months
Daily Average Trading value not less than 5 Crores in last 6 Months
At least 90% of Trading days in last 6 months
Non Promoter Holding at least 30%
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BETA not more than 4 ( previous last 6 months )
DESCRIPTION OF THE METHOD

The following are the steps involved in the study.
Selection of the scrip:The scrip selection is done on a random and the scrip selected is
OIL & NATURAL GAS CORPORATION LTD. The lot is 225. Profitability
position of
the futures buyers and seller and also the option holder and option
writers is studied.
Data Collection:The data of the ONGC Ltd has been collected from the the Economic
Times and the internet. The data consist of the March Contract and period of
Data collection is from 23rd FEBRUARY 2007 - 29th MARCH 2007.
Analysis:The analysis consist of the tabulation of the data assessing the profitability
Positions of the futures buyers and sellers and also option holder and the option
Writer, representing the data with graphs and making the interpretation using
Data.
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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
DIFINITION
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
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types of forward contracts in the sense that the former are standardized exchangetraded 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 Asian and
American stock indexes to interest-rate swaps, and their success transformed
Chicago almost overnight into the risk-transfer capital of the world.
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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
FORWARDS
an 1. OTC in nature
Organized Exchange
2.Standardized
2.Customized contract
contract
terms
terms
3. hence more liquid
3. hence less liquid
4. Requires margin
4. No margin payment
payment
5. Follows daily
5. Settlement happens
Settlement
at end of period
Table 2.1
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FEATURES OF FUTURES
Futures are highly standardized.
The contracting parties need not pay any down payment.
Hedging of price risks.
They have secondary markets too.
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 2.1
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
LOSS
L
Figure 2.2
F = FUTURES PRICE
E1, E2 = SETLEMENT 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 greater 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
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ONGC is 1800. The initial margin amount is say Rs. 30,000 the maintenance
margin is 65% of initial margin.
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
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
Futures price
Spot price of the underlying
Cost of financing (or) interest Rate
Expected dividend yield

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Holding Period
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 we 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
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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.
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 honour 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 brings 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
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were put writers who were unable to meet their commitments to purchase Tulip
bulbs.
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:
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These options have the index as the underlying. Some options are
European
while others are American. Like index futures contracts, index options contracts
are also cash settled.
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:
104
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
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
E
ATM
OTM
LOSS
Figure 2.3
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
104
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 E 1 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)
The buyer gets loss of (SP); if price goes down less than E 2 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
E
S
OTM
R
LOSS
Figure 2.4
S=
Strike price
ITM = In the Money
SP = Premium / profit
ATM = At The money
E1 = Spot Price 1
E2 = Spot Price 2
SR = loss at spot price E2
CASE 1: (Spot price < Strike price)
104
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 E 1 then also profit of the seller
does not exceed (SP).
CASE 2: (Spot price > Strike price)
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
OTM
S=
SP =
E1 =
E2 =
SR =
LOSS
Figure 2.5
ITM = In the Money
ATM = At the Money
Strike price
Premium / loss
Spot price 1
Spot price 2
Profit at spot price E1

104
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 E1 then profit also increases more
than (SR).
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 E 2 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
ATM
OTM
R
LOSS
S =
SP =
E1 =
E2 =
SR =
Strike price
Premium/profit
Spot price 1
Spot price 2
Loss at spot price E1

104
Figure 2.6
ITM = In The Money
ATM = At The Money
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).
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
104
very poor increases. The value of both calls and puts therefore increases as
volatility increase.
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 X- dividend 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.
104
The Black-Scholes formulas for the price of European calls and puts on a nondividend paying stock are:
104
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 2.2
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.
104
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.
In-the-money option:
An in-the-Money (ITM) option is an option that would lead to a positive cash flow
to the holder if it were exercised immediately. A call option on the index is said to
be in-the-money when the current index stands at a level higher than the strike
price (i.e. spot price > strike price). If the index is much higher than the strike
price, the call is said to be deep ITM. In the case of a put, the put is ITM if the
index is below the strike price.
At-the-money option:
An at-the-money (ATM) option is an option that would lead to zero cash flow if it
were exercised immediately. An option on the index is at-the-money when the
current index equals the strike price (i.e. spot price = strike price).
Out- ofthe money option:
An out-of-the-money (OTM) option is an option that would lead to a negative cash
flow it was exercised immediately. A call option on the index is out-of-the-the
money when the current index stands at a level which is less than the strike price
(i.e. spot price < strike price). If the index is much lower than the strike price, the
call is said to be deep OTM. In the case of a put, the put is OTM if the index is
above the strike price.
Intrinsic value of an option:
104
The option premium can be broken down into two components- intrinsic value and
time value. The intrinsic value of a call is the amount the option is ITM, if it is
ITM. If the call is OTM, its intrinsic value is zero.
Time value of an option:
The time value of an option is the difference between its premium and its intrinsic
value. Both calls and puts have time value. An option that is OTM or ATM has
only time value. Usually, the maximum time value exists when the option is ATM.
The longer the time to expiration, the greater is an options time value, all else
equal. At expiration, an option should have no time value.
DISTINCTION BETWEEN FUTURES AND OPTIONS

1.
2.
3.
4.
5.
6.
FUTURES
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
Table 2.3
CALL OPTION
PREMIUM
104

INTRINSIC
VALUE
TIME
VALUE
TOTAL
VALUE
CONTRACT
STRIKE PRICE
560
540
520
0
0
0
2
5
10
2
5
10
OUT OF
THE
MONEY
500
15
15
AT THE
MONEY
480
460
440
20
40
60
10
5
2
30
45
62
IN THE
MONEY
Table 2.4
PUT OPTION
PREMIUM
CONTRACT
STRIKE PRICE
INTRINSIC
VALUE
TIME
VALUE
TOTAL
VALUE
560
540
520
60
40
20
2
5
10
62
45
30
IN THE
MONEY
500
15
15
AT THE
MONEY
480
460
440
0
0
0
10
5
2
10
5
2
OUT OF
THE
MONEY
Table 2.5
PREMIUM = INTRINSIC VALUE + TIME VALUE
The difference between strike values is called interval
TRADING INTRODUCTION
104
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
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.
TRADING SYSTEM
104
Nation wide-online-fully Automated Screen Based Trading System (SBTS)

Price priority
Time Priority
Note:- 1) NEAT system provides open electronic consolidated limit orders book
(OECLOB)
2) Limit order means: Stated Quantity and stated price
Before Opening the market
User allowed to set Up 1) Market Watch Screen
2) Inquiry Screens Only
Open phase (Open Period)
User allowed to 1) Enquiry
2) Order Entry
3) Order Modification
4) Order Cancellation
5) Order Matching
Market closing period
User Allowed only for inquiries
Surcon period
(Surveillance & Control period)
The System process the Date, for making the system, for the Next Trading day.
Log of the Screen (Before Surcon Period)
The screen shows :-
1) Permanent sign off

2) Temporary sign off
3) Exit
Not allowed inquiry

and
Order Placing
Permanent sign off: - market not updates.
104
Temporary sign off: - market up date (temporary sign off, after 5 minutes
Automatically Activate)
Exit: - the user comes out sign off Screen.
Local Database
Local Database is used for all inquiries made by the user for Own Order/Trades
Information. It is used for corporate manager/ Branch Manager Makes inquiries
for orders/ trades of any branch manager /dealer of the trading firm, and then the
inquiry is Serviced By the host. The local database also includes message of
security information.
Ticker Window
The ticker window displays information of All Trades in the system.
The user has the option of Selecting the Security, which should be appearing in
the ticker window.
Securities in ticker can be selected for each market types
The ticker window displays both derivative and capital market segment
Market watch Window
Title Bar: Title Bar Shows: NEAT, Date & Time.
Market watch window felicitate to set only 500 Scrips, But the User set up a
Maximum of 30 Securities in one Page.
Previous Trade Screen
Previous trade screen shows & allows security wise information to user for his own
trade in chronological order.
1) request for trade modification allowed with the following conditions
During the day only
Must be lower then the traded Quantity
Both Parties acceptance (Buyer and Seller)
104
Final Decision is taken by NSE (to accept or reject)

2) Request for Trade Cancellation Allowed with same as Above Conditions (A).
Out Standing Order Screen
Out standing Order Screen show, Status out Standing Order enter by User for a
particular security (R.L. Order & SL Order) it Allows :- Order Modification &
Orders Cancellation.
Activity Log Screen
Activity logon screen show, all Activities performed on any order by the User, in
Reversal chronological Order
B
Buying
Selling Orders
OC Cancellation of Order
OM Modifying Order
TC BUY Order & Sell Order, Involving in
Trade are Cancelled
TM By Order & Sell Orders, involving Trade is
Modified
It is very useful to a corporate manager to view all the activities that have been
performed on any order (or) all ordered under his Branches & Dealers
Order status Screen
Order Status Screen Shows, Current status of dealers own Specified Orders
SNAP Quote Shows
Instantaneous Information About a particular Security can be shown on Market
watch window (which is not set up in market Watch window)
Market Movement Option
Over all Movement of the Security, in Current Day, on time Basis.
104
Market Inquiry
Market Inquiry Screen Shows Market Statistics for Particular Market, for a
particular Security.
It shows information about:RL Market
(Regular lot Market)
RD
(Retail Debt Market)
Market
OL Market
(Odd lot Market)
It shows Following Statistics: - Open Price, High Price, Low Price, Last Traded
Price, Traded Quantity, 52 Weeks high/Low Price.
MBP (Market by Price)
MBP (F6) Screen shows Total Out standing Orders of a particular security, in the
Market, Aggregate at each price in order of Best 5 prices.
It Shows: -
RL Order (Regular Lot Order)

SL Order (Stop Loss Order)
ST Order (Special Term Orders)
Buy Back Order with * Symbol
P = indicate Pre Open Position
S = Indicate Security Suspend
Security/ Portfolio List
It Facilitate the user to set up market watch screen

And Facilitate to set up his own portfolios
ON-LINE Bach Up
It facilitates the user to take back up of all Orders & Trade Related information, for
current day only.
ON-LINE/TABULAR SLIPS
104
It Select the Format for conformation slips

About Window
This window displays Software related version numbers details and copy right
information.
Most Activity Securities Screen
It shows most active securities, based on the total traded value during the day
Report Selection Window
It facilitates to print each copy of report at any time. These Reports are
1) Open order report :- For details of out standing orders
2) Order log report:-For details of orders placed, modified&cancelled
3) Trade Done-today report :- For details of orders traded
4) Market Statistics report: - For details of all securities traded

Information in a Day
Internet Broking
1) NSE introduced internet trading system from February 2000
2) Client place the order through brokers on order routing system
WAP (Wireless Application Protocol)
1) NSE.IT Launches the from November 2000
2) 1st Step-getting the permission from exchange for WAP
3) 2nd step-Approved by the SEBI(SEBI Approved only for SEBI registered
Members)
X.25 Address check
X.25 Address check, is performed in the NEAT system, when the user log on into
the NEAT, system & during report down load request.
FTP (File Transfer protocol)
104
1) NSE Provide for each member a separate directory (File) to know their trading
DATA, clear DATA, bill trade Report.
2) NSE Provide in Addition a Common directory also, to know circulars,
NCFM & Bhava Copy information.
3) FTP is connected to each member through VSAT, leased line and internet.
4) VSAT (FROM 4:15PM to 9:30AM), Internet (24 Hours).
Bhava Copy Data Base
Bhava copy data provides summary information about each security, for each day
(only last 7 days bhava Copy file are stored in report directory.)
Note: - Details in Bhava copy-open price, high and low prices, closing prices
traded value, traded volume and No. of transactions.
Snap Shot Data Base
Snap shot data base provides Snap shot of the limit order book at many time points
in a day.
Index Data Base
Index Data Base provides information about stock market indexes.
Trade Data Base
Trade Data Base provides a data base of every single traded order, take place in
exchange.
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.
104
3) 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.
TRADING NETWORK
104
HUB ANTENNA
SATELLITE
NSE MAIN FRAME

BROKERS PREMISES
Figure 2.7
Participants in Security Market
104
1)
2)
3)
4)
5)
Stock Exchange (registered in SEBI)-23 Stock Exchanges

Depositaries (NSDL,CDSL)-2 Depositaries
Listed Securities-9,413
Registered Brokers-9,519
FIIs-502
Highest Investor Population
State
Total No. Investors
% of Investors in India
Maharastra
9.11 Lakhs
28.50
Gujarat
5.36 Lakhs
16.75
Delhi
3.25 Lakhs
10.10%
Tamilnadu
2.30 Lakhs
7.205
West Bangal
2.14 Lakhs
6.75%
Andhra Pradesh
1.94 Lakhs
6.05%
Table 2.6
Investor Education & protection Fund
This fund used to educate & develop the awareness of the Investors.
The following funds credited to IE & PF
1) Unpaid dividends
2) Due for refund (application money received for allotment)
3) Matured deposits & debentures with company.
4) Government donations.
104
company
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104
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104
things. Sharekhans expertise lies in stocks and thats what he talks about with
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104
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104
ANALYSIS
The Objective of this analysis is to evaluate the profit/loss position futures and
options. This analysis is based on sample data taken of NTPC Scrip. This analysis
considered the JANUARY contract of NTPC. The lot Size of NTPC is 1625, the
time period in which this analysis done is from 01-1-2009 to 18-2-2009.
Date
1-Jan-09
2-Jan-09
5-Jan-09
6-Jan-09
7-Jan-09
9-Jan-09
12-Jan-09
13-Jan-09
14-Jan-09
15-Jan-09
16-Jan-09
19-Jan-09
20-Jan-09
21-Jan-09
22-Jan-09
23-Jan-09
27-Jan-09
28-Jan-09
29-Jan-09
30-Jan-09
2-Feb-09
3-Feb-09
4-Feb-09
5-Feb-09
6-Feb-09
9-Feb-09
10-Feb-09
11-Feb-09
12-Feb-09
13-Feb-09
16-Feb-09
17-Feb-09
18-Feb-09
Open
179.4
181.2
182.5
178.9
175.05
168.9
177.5
166.1
164.15
162.25
162
174.25
172.05
178
174.95
172.1
173.85
185.9
189.8
183
187
179.8
178.1
176.25
176.5
180.1
181.5
178.5
179.15
181.45
182.9
177.25
171.6
High
Low
181.4
184.2
182.5
179
175.05
174.8
177.5
167
166.3
164.45
175.8
175.5
182.15
181.1
176.5
173.45
186.3
188.8
189.8
188.9
187
181.4
179.8
176.7
181.25
182.9
183.35
182.5
181.75
184.6
182.9
177.25
176.55
Close
178.1
178.55
177.5
172.7
165.55
165.8
165
162
161.85
160
162
172.4
169.3
173.4
171.65
167.45
171.6
183
181.1
182.2
177.5
174.3
173.55
173.25
176.5
177
178.1
177.4
179.15
180.9
176.75
172.75
171.55
104
180.9
182.85
179.4
174.75
168.85
173.9
166.55
163.15
164.7
160.8
174.45
174.1
180.4
174.95
173.05
170.55
185.25
187.35
184.55
188.05
178.05
175.95
175.4
175.8
179.45
182.4
180.2
180.5
180
182.75
177.6
173.4
175.75
Qty
43441780
43378320
50263850
64962540
49464510
54847000
60508820
1.26E+08
4.37E+08
2.05E+08
3.12E+08
1.46E+08
5.67E+08
1.07E+09
7.17E+08
1.13E+09
2.33E+09
2.06E+09
2.83E+09
2.58E+09
2.38E+09
3.67E+09
2.35E+09
1.52E+09
2.21E+09
2.29E+09
2.61E+09
1.87E+09
1.54E+09
2.12E+09
2.31E+09
2.01E+09
15089750
GRAPH ON PRICE MOVEMENTS OF NTPC FUTURES
FUTURE MARKET
BUYER
SELLER
15/1/2009(buying)
162.25
162.25
17/2/2009 (Closing period)
177.25
177.25
Profit
15.00
Profit 15 x 1625= 24375,
Loss
15.00
Loss 15 x 1625 = 24375
Because buyer future price will increase so, profit also increases, seller future price
also increase so, and he can get loss. Incase seller future will decrease, he can get
profit.
The closing price of NTPC at the end of the contract period is 177.25 and this is
considered as settlement price.
The following table explains the market price and premiums of calls.
The first column explains TRADING DATE.
Second column explains the SPOT MARKET PRICE in cash segment
on that date.
The fifth column explains the FUTURE MARKET PRICE in cash
segment on that date.
104
CALL PRICES
DATE
20-Jan-09
21-Jan-09
22-Jan-09
23-Jan-09
24-Jan-09
25-Jan-09
26-Jan-09
27-Jan-09
28-Jan-09
29-Jan-09
30-Jan-09
31-Jan-09
1-Feb-09
2-Feb-09
3-Feb-09
4-Feb-09
5-Feb-09
6-Feb-09
7-Feb-09
8-Feb-09
9-Feb-09
10-Feb-09
11-Feb-09
12-Feb-09
13-Feb-09
14-Feb-09
15-Feb-09
16-Feb-09
17-Feb-09
18-Feb-09
PRICES
SPOT
PRICE
176.1
182.7
182
178
180.55
190.1
189.9
187.4
PRIMIU
M
FUTURE
PRICE
185.95
179.95
178.55
179.85
190.1
191.25
190.25
189.65
140
45
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
182
183.9
178.1
179
180.7
184.5
177.05
172
181.2
176.9
176.85
176.85
180.35
182.95
180.3
180.45
179.85
182.95
182.95
180.3
180.45
104
160
21.45
17.95
*
*
*
*
*
49
*
*
*
*
*
*
*
*
*
*
*
*
*
*
26
0
13.25
22.8
20
18.25
*
28.9
*
*
43
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
24
28
34.75
*
*
170
11
15.55
12
12
*
*
35
*
*
188.5
182
177
177
180
150
*
*
29
22
22.5
18.85
*
*
*
19.05
16
14
11
12
*
*
23
*
*
*
*
*
*
*
*
12.5
15.5
15
12.65
14.5
*
*
27
9.7
9
6.5
175
13.75
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
7.2
9.6
*
*
*
*
7.05
*
*
*
*
7.35
5
2.85
OBSERVATIONS AND FINDINGS

CALL OPTION
BUYERS PAY OFF:
As brought 1 lot of NTPC that is 1625, those who buy for 170, paid 9.7
premiums per share.
Settlement price is 184.50
Spot price
184.50
Strike price
170.00
Amount
14.50
Premium paid (-)
09.70
Net Profit
04.80 x 1625= 7800
Buyer Profit = Rs. 7800(Net Amount)
Because it is positive it is in the money contract, hence buyer will get more profit,
incase spot price increase buyer profit also increase.
SELLERS PAY OFF:
It is in the money for the buyer, so it is in out of the money for seller;
hence his loss is also increasing.
Strike price
170.00
Spot price
184.50
Amount
-14.50
Premium Received
09.70
Loss
- 04.80 x 1625 = -7800
Seller Loss = Rs. -7800(Loss)
Because it is negative it is out of the money, hence seller will get more loss,
incase spot price decrease in below strike price, seller get profit in premium level.
104
PUT PRICES
DATE
20-Jan-09
21-Jan-09
22-Jan-09
23-Jan-09
24-Jan-09
25-Jan-09
26-Jan-09
27-Jan-09
28-Jan-09
29-Jan-09
30-Jan-09
31-Jan-09
1-Feb-09
2-Feb-09
3-Feb-09
4-Feb-09
5-Feb-09
6-Feb-09
7-Feb-09
8-Feb-09
9-Feb-09
10-Feb-09
11-Feb-09
12-Feb-09
13-Feb-09
14-Feb-09
15-Feb-09
16-Feb-09
17-Feb-09
18-Feb-09
PRICES
SPOT
PRICE
176.1
182.7
182
178
PRIMIUM
FUTURE
PRICE
185.95
179.95
178.55
179.85
140
1.45
1.9
1.05
1.55
150
3.45
3.45
3.85
4
*
*
*
180.55
190.1
189.9
187.4
190.1
191.25
190.25
189.65
1.6
1.5
1.2
1.05
*
*
*
3.15
2
2
1.35
*
*
188.5
182
177
177
180
181.2
176.9
176.85
176.85
180.35
0.95
1
1.05
1.05
0.7
182.95
180.3
180.45
179.85
182.95
182.95
180.3
180.45
0.25
0.15
0.2
Table 4.7
104
2.55
2.5
3.45
3.3
2.1
0.8
0.55
0.75
0.5
0.45
3.55
4.8
4.95
5.4
3.6
*
*
1.6
1.2
1.5
1.35
0.8
*
*
0.25
0.3
0.6
7.5
4.25
4.3
4.7
*
*
*
*
*
*
184.5
177.05
172
4.35
3.15
2.8
3.1
1.8
1.6
1.35
1.9
1.2
0.45
0.3
0.4
0.3
0.2
170
10
7.5
9.55
9.5
*
*
*
*
*
*
*
182
183.9
178.1
179
180.7
160
*
4.8
5
6.9
3.85
2.95
2.75
2.5
2
*
*
0.6
0.7
1.45
1.5
2.55
3.25
OBSERVATION AND FINDINGS

PUT OPTION
BUYERS PAY OFF:
Those who have purchase put option at a strike price of 170, the premium
payable is 10
On the expiry date the spot market price enclosed at 172
Strike Price
Spot Price
Net pay off
170.00
172.00
- 02.00 x 1625 = 3250
=====
Already Premium paid 10
So, it can get loss is 3250
Because it is negative, out of the Money contract, Hence buyer gets more loss,
incase Spot price decrease in below strike price, buyer get profit in premium level.
SELLERS PAY OFF:
As Seller is entitled only for premium so, if he is in profit and also seller has
to borne total profit.
Spot price 172.00
Strike price 170.00
Net pay off
02.00 x 1625 = 3250
======
Already Premium received 10
So, it can get profit is 3250
Because it is positive, in the Money Contract, Hence Seller gets more profit,
incase Spot price decrease in below strike price Seller can get loss in premium
level.
104
DATA OF NTPC - THE FUTURES AND OPTIONS OF THE JAN-FEB

MONTHS
DATE
20-Jan-09
21-Jan-09
22-Jan-09
23-Jan-09
24-Jan-09
25-Jan-09
26-Jan-09
27-Jan-09
28-Jan-09
29-Jan-09
30-Jan-09
31-Jan-09
1-Feb-09
2-Feb-09
3-Feb-09
4-Feb-09
5-Feb-09
6-Feb-09
7-Feb-09
8-Feb-09
9-Feb-09
10-Feb-09
11-Feb-09
12-Feb-09
13-Feb-09
14-Feb-09
15-Feb-09
16-Feb-09
17-Feb-09
18-Feb-09
SPOT
PRICE
176.1
182.7
182
178
FUTURE
PRICE
185.95
179.95
178.55
179.85
180.55
190.1
189.9
187.4
190.1
191.25
190.25
189.65
188.5
182
177
177
180
181.2
176.9
176.85
176.85
180.35
182
183.9
178.1
179
180.7
182.95
180.3
180.45
179.85
182.95
184.5
177.05
172
182.95
180.3
180.45
104
OBSERVATIONS AND FINDINGS

The future price of ONGC is moving along with the market price.
If the buy price of the future is less than the settlement price, than the buyer
of a future gets profit.
If the selling price of the future is less than the settlement price, than the
seller incur losses.
TRADING STRATEGIES INVOLVING OPTIONS

104
SPREADS:
A spread trading strategies are most popular tools; these are used
when there is a grate chance to go up/down these spreads are used. Spreads are two
types Bullish and Bearish Spreads.
BULL SPREADS:
One of the most popular types spreads is a bull spread. This
can be created by buying a call option on a stock with a certain strike price and
selling a call option on the same stock with a higher strike price. Both options have
the same expiration date. The strategy is illustrated in figure. The profit from the
whole strategy is the sum of the profits given by both long and short call. Because
a call price always decreases as the strike price increases, the value of the option
sold is always less than the value of the option bought. A bull spread, when created
from calls, therefore requires an initial investment.
FIGURE: Profit from bull spread created using call option
K1
K2
St
If the stock price does well and is greater than the higher strike price, the payoff is
the difference between the two strike prices, or k2-k1. If the stock price, on the
104
expiration date lies between the two strike prices, the payoff is S^T-K1. If the stock
price on the expiration dates below the lower strike price, the payoffs zero. The
profit is calculated by subtracting the initial investment from the pay off.
Stock price
Pay off from long Payoff from short

call option
call option
Total payoff
St K2
St-K1
-(ST-K2)
K2-K1
K1< St < K2
St K1
St-K1
0
0
0
ST-K1
0
A bull spread strategy limits the investors upside as well as down side risk. The
strategy can be described by saying that the investor has a call option with strike
price equal to K1 and has chosen to give up some upside potential by selling a call
option with strike price K2(K2>K1). In return for giving upside potential, the
investor gets the price of the option with strike priceK2.
FIGURE : Profit from bull spread created using put options

Profit
104
K2
k1
St
BEAR SPREADS:
An investor who enters into a bull spread is hoping that the
stock price will increase. By contrast, an investor who enters into a bear spread is
hopping that the stock price will decline. Bear spreads can be created by buying a
put with one strike price and selling a put with another strike price. The strike price
of the option purchased is grater than the strike price of the option sold. ( this is in
contrast to a bull spread, where the strike price of the option purchased is always
less than the strike price of the option sold.)
Stock price
St K2
K1< St < K2
St K1
Payoff from long

put option
0
K2 St
K2 - St
Payoff from short

put option
0
0
- (K1 - St)
Total payoff
0
K2 St
K2 k1
In figure the profit from the spread is shown by the solid line. A bear spread
created from puts involves an initial cash outflow because the piece of the put
purchased. In essence, the investor has bought a put with certain strike price and
chosen to give up some of the profit potential by selling a put with a lower strike
price. In return for the profit given up, the investor gets the price of the option sold.
104
FIGURE: Profit from bear spread created using put option.

Profit
K1
K2
St
Assume that the strike prices are K1 and K2. Table shows the payoff that will be
realized from a bear spread in different circumstances. If the stock price is grater
than K2, the payoff is zero. If the stock price is less than K1, the payoff is K2
K1. If the stock price is between K1 and K2, the payoff is K2 St. The profit is
calculated by subtracting the initial cost from the payoff.
FIGURE: Profit from bear spread created using call option.

104
Profit
K1
K2
104
TECHNICAL ANALYSIS BY USING MOVING AVERAGES:

Price Crosses Moving Average:
Description
A moving average is an indicator that shows the average value of a security's price
over a period of time. This type of Technical Event occurs when the price crosses
a moving average. Three moving averages are supported: 21, 50 and 200 price
bars. A price cross of a longer moving average indicates a longer term signal, in
that the security may take a longer period of time to move in the anticipated
direction.
A bullish signal is generated when the security's price rises above its moving
average and a bearish signal is generated when the security's price falls below its
moving average.
After a crossover is identified, it is considered "not yet confirmed". Then additional
confirmation is sought by watching the slope of the moving average. A bullish
event is "confirmed" if the moving average turns upward within 'X' price bars,
where 'X' is the period of the moving average. For a bearish event, the moving
average must turn downward as confirmation. In some cases, the moving average
does not slope in the desired direction soon enough after the crossover, in which
case the event is considered "never confirmed".
These events are based on simple moving averages. A simple moving average is
one where equal weight is given to each price over the calculation period. For
example, a 21-day simple moving average is calculated by taking the sum of the
last 21 days of a stock's close price and then dividing by 21. Other types of moving
averages, which are not supported here, are weighted averages and exponentially
smoothed averages.
104
Trading Considerations
Moving averages are lagging indicators because they use historical information.
Using them as indicators will not get you in at the bottom and out at the top but
will get you in and out somewhere in between.
They work best in trending price patterns, where an uptrend or downtrend is firmly
in place.
In trending markets, moving averages can provide a very simple and effective
method of identifying trends.
Moving averages also act as support areas. You will often see a stock in an uptrend
rise well above its 21 day moving average, return to it and then rise again.
Moving averages also act as resistance areas. When a stock trades under a moving
average, that average will serve as a resistance price and it will be difficult for the
stock to move above it. This is often very true when a stock has fallen below its
200 day moving average.
104
Double Moving Average Crossover:

Description
A moving average is an indicator that shows the average value of a security's price
over a period of time. This type of Technical Event occurs when a shorter and
longer moving average cross each other. The supported crossovers are 21 crossing
50 (a short term signal) and 50 crossing 200 (a long term signal).
A bullish signal is generated when the shorter moving average crosses above the
longer moving average. A bearish signal is generated when the shorter moving
average crosses below the longer moving average.
These events are based on simple moving averages. A simple moving average is
one where equal weight is given to each price over the calculation period. For
example, a 21-day simple moving average is calculated by taking the sum of the
last 21 days of a stock's close price and then dividing by 21. Other types of moving
averages, which are not supported here, are weighted averages and exponentially
smoothed averages.
104
Trading Considerations
Moving averages are lagging indicators because they use historical information.
Using them as indicators will not get you in at the bottom and out at the top but
will get you in and out somewhere in between.
They work best in trending price patterns, where an uptrend or downtrend is firmly
in place.
Using a crossover moving average as an indicator is considered to be superior to
the simple moving average because there are two smoothed series of prices which
reduces the number of false signals.
EDU COMPUTERS:
EDU computers is an IT industries script with the
lot size of 75
104
The future prices at SELL and BULL Signals:
CASE1:
The price at sell signal 2440
The price at buy signal 1663
Profit = selling price buying price
= 2440 1663
=777
Now,
the total profit = Lot size * Profit
= 75 * 777
TOTAL PROFIT=58275
CASE2:
104
= 1665-1663
=2
Now,
= 75 * 2
TOTAL PROFIT=150
CASE3
= 1665 - 1374
=291
Now,
= 75 * 291
TOTAL PROFIT=21825
CASE4
= 1945 - 1374
=571
Now,
= 75 * 571
TOTAL PROFIT=42825
104
The future prices at SELL and BULL Signals:

CASE1:
104

= 2184 - 1499
=685
Now,
= 75 * 685
TOTAL PROFIT=51375
CASE2:
= 1795 - 1499
=296
Now,
= 75 * 296
TOTAL PROFIT=22200
ANNEXURE 1:
1. UNITECH:
DATE 3rd Jan 2014
Investment
p/l
SYMBOL
UNITECH
266400
-89400
Buy Stock
@66.6
DATE
HIGHPRICE LOW
CLOSE
QTY
TOTAL
P/L
PRICE PRICE
VALUE
3-Jan-14
67.5
65.35
66.6
4000
266400
0
104
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
4-Jan-14
5-Jan-14
6-Jan-14
7-Jan-14
10-Jan-14
11-Jan-14
12-Jan-14
13-Jan-14
14-Jan-14
17-Jan-14
18-Jan-14
19-Jan-14
20-Jan-14
21-Jan-14
24-Jan-14
25-Jan-14
27-Jan-14
28-Jan-14
31-Jan-14
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
68
66.8
65.65
62.9
62.5
59.8
59.4
61.65
60.9
58.8
58.15
59.5
59.1
58.95
58.2
58.6
57
53.45
50.95
49
47.05
46.75
46.3
46
65.25
64.35
61.25
61.05
58.8
54.4
54.15
57.65
56.85
55.55
55.55
56.2
56.95
56.65
56.75
55.75
52.9
48.6
46.9
42.35
44
44.3
42.6
43.4
65.6
64.85
61.6
61.4
59.3
55.35
58.95
59.8
57.45
56.9
57.6
59.05
57.9
57.15
57.9
55.95
53.3
51.05
48.05
43.05
45.15
46.45
43.1
44.25
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
4000
262400
259400
246400
245600
237200
221400
235800
239200
229800
227600
230400
236200
231600
228600
231600
223800
213200
204200
192200
172200
180600
185800
172400
177000
-4000
-7000
-20000
-20800
-29200
-45000
-30600
-27200
-36600
-38800
-36000
-30200
-34800
-37800
-34800
-42600
-53200
-62200
-74200
-94200
-85800
-80600
-94000
-89400
Analysis :
As on 3rd January, the amount invested in the shares of UNITECH was 266400 by
purchasing the 4000 quantity of shares at close price of Rs.66.6
(4000 x 66.6 = 266400)
th
But on 7 February the price of the shares of the company fell down to Rs.44.25
Thus by selling the shares after holding it till 7th February , the total loss is
Rs.89400 was observed.
Loss on 1 share by selling the shares on 7th February 66.6 -44.25 =22.35
Hence, total loss by selling 4000 shares = 4000 x 22.35 =89400.
a. Short future :
Investment
Profit/ Loss
Expiry date
: 249600
: -72000
: 24-Feb-2014
104
SYMBOL
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
DATE
6-Jan-14
7-Jan-14
10-Jan-14
11-Jan-14
12-Jan-14
13-Jan-14
14-Jan-14
17-Jan-14
18-Jan-14
19-Jan-14
20-Jan-14
21-Jan-14
24-Jan-14
25-Jan-14
27-Jan-14
LOW
HIGHPRICE PRICE
66.2
62.05
63.4
61.6
63
59.45
60.1
55
59.8
54.6
62
58.05
61.4
57.55
59
56.6
58.4
56.05
59.65
56.8
59.4
57.4
59.35
57.2
58.6
57.2
59
56.2
57.1
53.35
104
SHORT FUTURE
@62.4
CLOSE
TOTAL
PRICE
QTY
VALUE
P/L
62.4
4000
249600
0
61.9
4000
247600
-2000
59.75
4000
239000 -10600
55.9
4000
223600 -26000
59.6
4000
238400 -11200
60.25
4000
241000
-8600
58.05
4000
232200 -17400
57.25
4000
229000 -20600
58.1
4000
232400 -17200
59.3
4000
237200 -12400
58.5
4000
234000 -15600
57.75
4000
231000 -18600
58.35
4000
233400 -16200
56.4
4000
225600 -24000
53.8
4000
215200 -34400
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
28-Jan-14
31-Jan-14
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
53.85
51.2
48.7
47.2
46.85
46
46.1
48.9
47.25
42.4
44.2
44.6
42.5
43.8
51.4
48.45
43.1
45.2
46.5
43
44.4
4000
4000
4000
4000
4000
4000
4000
205600
193800
172400
180800
186000
172000
177600
-44000
-55800
-77200
-68800
-63600
-77600
-72000
Analysis:
Enter into short futures on 6th January at Rs. 62.4
By holding it till 7th February, we may reduce the loss from Rs.89400 to 72000
Loss on 1 share by selling the shares on 7th February 62.4 - 44.4 = 18
Hence, total loss by selling 4000 shares = 4000 x 18= 72000
b.Short put :
Date: 3rd Jan 2014
Investment
Profit/ Loss
Expiry date
SYMBOL
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
UNITECH
DATE
6-Jan-14
7-Jan-14
10-Jan-14
11-Jan-14
12-Jan-14
13-Jan-14
14-Jan-14
17-Jan-14
18-Jan-14
19-Jan-14
20-Jan-14
21-Jan-14
24-Jan-14
25-Jan-14
27-Jan-14
28-Jan-14
: 249600
: -72000
: 24-Feb-2014
SHORT PUT @4
CLOSE
SETTLE
NO.OF
STK.PRICE PRICE
PRICE
CTRT
QTY
TOT.VALUE P/L
55
4
1.6
0
4000
16000
0
55
4
1.5
0
4000
16000
0
55
2
2
1
4000
8000
-8000
55
3.95
3.95
1
4000
15800
-200
55
3.95
3
0
4000
15800
-200
55
3.95
2.6
0
4000
15800
-200
55
3.95
3.4
0
4000
15800
-200
55
3.95
3.3
0
4000
15800
-200
55
3.15
3.15
4
4000
12600
-3400
55
3.15
2.35
0
4000
12600
-3400
55
2.3
2.3
15
4000
9200
-6800
55
2.25
2.25
12
4000
9000
-7000
55
2.05
2.05
26
4000
8200
-7800
55
2.8
2.8
45
4000
11200
-4800
55
3.65
3.65
109
4000
14600
-1400
55
5.6
5.6
119
4000
22400
6400
104
UNITECH 31-Jan-14
UNITECH 1-Feb-14
UNITECH 2-Feb-14
UNITECH 3-Feb-14
UNITECH 4-Feb-14
UNITECH 7-Feb-14
55
55
55
55
55
55
7.55
11.9
12.95
9
12.5
12.5
7.55
11.9
12.95
9
12.5
11.1
33
64
15
2
5
0
4000
4000
4000
4000
4000
4000
30200
47600
51800
36000
50000
50000
14200
31600
35800
20000
34000
34000
Analysis:
Enter into a short put on 6th Jan at Rs.4
By holding it till 7th Feb, we can gain the profit of Rs.34000
Profit on 1 share by selling the shares on 7th February 12.5 4 =8.5
Hence, total profit by selling 4000 shares = 4000 x 8.5= 34000
ANNEXURE 2
TATA CONSULTANCY SERVICES LTD
Date: 3rd Jan 2014
Investment
Profit/ Loss
: 579025
: -13450
SYMBOL DATE
HIGHPRICE LOWPRICE
TCS
3-Jan-14
1176.95
1154.55
TCS
4-Jan-14
1166.15
1138.1
TCS
5-Jan-14
1165.9
1141.75
TCS
6-Jan-14
1182
1153.1
TCS
7-Jan-14
1186.85
1138.15
TCS
10-Jan14
1149
1121
TCS
11-Jan14
1135.55
1087.8
TCS
12-Jan14
1151.6
1108
TCS
13-Jan14
1155.95
1116.2
TCS
14-Jan14
1150
1120
TCS
17-Jan14
1146.55
1120
TCS
18-Jan14
1208.9
1164.35
TCS
19-Jan14
1209
1185
TCS
20-Jan14
1218.75
1180
TCS
21-Jan14
1220
1204
TCS
24-Jan14
1220
1198.25
TCS
25-Jan14
1219.3
1180
TCS
27-Jan14
1209.95
1181.6
TCS
28-Jan14
1203.6
1165.25
TCS
31-Jan14
1169
1128.55
104
Buy Stock @1158.05

CLOSEPRICE QTY TOTALVALUE
1158.05
500
579025
1144.75
500
572375
1158.95
500
579475
1171.7
500
585850
1142.65
500
571325
1130.9
500
565450
1098.5
500
549250
1135.95
500
567975
1124.25
500
562125
1120.15
500
560075
1137.4
500
568700
1202.55
500
601275
1193
500
596500
1212.2
500
606100
1211.65
500
605825
1209.2
500
604600
1188.55
500
594275
1199.4
500
599700
1181.35
500
590675
1159.5
500
579750
0
-6650
450
6825
-7700
-13575
-29775
-11050
-16900
-18950
-10325
22250
17475
27075
26800
25575
15250
20675
11650
725
TCS
TCS
TCS
TCS
TCS
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
1165
1198.9
1195.7
1183.1
1173.5
1133
1162.35
1170.65
1140.25
1126.5
1150.15
1182.45
1183.7
1148.8
1131.15
500
500
500
500
500
575075 -3950
591225 12200
591850 12825
574400 -4625
565575 -13450
Analysis:
As on 3rd March, the amount invested in the shares of TCS was Rs.579025 by
purchasing the 500 quantity of shares at close price of Rs.1158.05
(500 x 1158.05 = 579025)
th
But on 7 February, the price of the shares of the company fell down to 1131.15
Thus by selling the shares after holding it till 7th February, the total loss of
Rs.13450 was observed.
Loss on 1 share by selling the shares on 7th February 1158.05 1131.15 = 26.9
Hence, total loss by selling 500 shares = 500 x 22.35 = 13450.
b. SHORT FUTURE
DATE 3rd Jan 2014
Investment
p/l
577675
-9075
SYMBOL DATE
TCS
7-Jan-14
EXP
DATE
24-Feb-14
TCS
10-Jan-14
24-Feb-14
TCS
TCS
TCS
11-Jan-14
12-Jan-14
13-Jan-14
24-Feb-14
24-Feb-14
24-Feb-14
TCS
TCS
TCS
TCS
TCS
TCS
TCS
TCS
TCS
TCS
TCS
TCS
14-Jan-14
17-Jan-14
18-Jan-14
19-Jan-14
20-Jan-14
21-Jan-14
24-Jan-14
25-Jan-14
27-Jan-14
28-Jan-14
31-Jan-14
1-Feb-14
24-Feb-14
24-Feb-14
24-Feb-14
24-Feb-14
24-Feb-14
24-Feb-14
24-Feb-14
24-Feb-14
24-Feb-14
24-Feb-14
24-Feb-14
24-Feb-14
SHORT FUTURE
@1153.35
LOW
CLOSE
TOTAL
HIGHPRICE PRICE PRICE
QTY VALUE P/L
1199.2
1149.1
1153.35
500 576675
0
1160.3
1130
1133.3
500 566650 10025
1137.7
1096
1106.25
500 553125 23550
1158.35
1120.1
1139.65
500 569825 -6850
1160 1123.25
1130.8
500 565400 -11275
1159.15 1122.25
1125.85
500 562925 13750
1150.1
1124.5
1142.2
500 571100 -5575
1212.2
1169.9
1208.55
500 604275 27600
1212
1190.6
1196.8
500 598400 21725
1221
1185.7
1217.8
500 608900 32225
1220.1
1208.2
1215.3
500 607650 30975
1221.7 1203.25
1211.15
500 605575 28900
1221.25
1185.9
1192.6
500 596300 19625
1211
1188
1202.3
500 601150 24475
1205
1172
1188.35
500 594175 17500
1175.25
1137
1161.6
500 580800
4125
1164.2
1135.5
1151.95
500 575975
-700
104
TCS
TCS
TCS
TCS
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
24-Feb-14
24-Feb-14
24-Feb-14
24-Feb-14
1201.7
1199.7
1189
1170
1162
1172.5
1140
1130.95
1183.15
1189.2
1145.45
1135.2
500
500
500
500
591575
594600
572725
567600
14900
17925
-3950
-9075
ANALYSIS:
Enter into short future on 6th Jan at Rs. 1153.35

But on 7th February, the share price fall down to 1135.2
Hence, total loss by selling 500 shares = 500 x 18.15 = 9075
By holding it till 7TH Feb,we may reduce the loss Rs 13450 from to 9075
c. SHORT PUT
DATE
Investment
p/l
EXP.DATE
SYMBOL DATE
TCS
7-Jan-14
TCS
10-Jan-14
TCS
11-Jan-14
TCS
12-Jan-14
TCS
13-Jan-14
TCS
14-Jan-14
TCS
17-Jan-14
TCS
18-Jan-14
TCS
19-Jan-14
TCS
20-Jan-14
TCS
21-Jan-14
TCS
24-Jan-14
TCS
25-Jan-14
TCS
27-Jan-14
3rd Jan 2014
1700
-100
24-Feb-14
STK.PRICE CLSPRICE
1000
3.4
1000
3.4
1000
10.55
1000
7.9
1000
10
1000
10.2
1000
10.25
1000
5
1000
5
1000
5
1000
5
1000
5
1000
2.3
1000
2.7
104
SHORT PUT @3.4

SET.
PRICE
NO.OFCTRT QTY TOT.VAL
3.4
2
500
1700
3.2
0
500
1700
10.55
8
500
5275
7.9
3
500
3950
10
6
500
5000
10.2
7
500
5100
10.25
4
500
5125
5
6
500
2500
3.55
0
500
2500
2.3
0
500
2500
1.85
0
500
2500
1.3
0
500
2500
2.3
2
500
1150
2.7
2
500
1350
P/L
0
3575
2250
3300
3400
3425
800
800
800
800
800
-550
-350
TCS
TCS
TCS
TCS
TCS
TCS
TCS
28-Jan-14
31-Jan-14
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
1000
1000
1000
1000
1000
1000
1000
2.65
4
3.85
2.7
2.2
3.3
3.2
2.65
4
3.85
2.7
2.2
3.3
3.2
20
30
35
34
11
11
35
500
500
500
500
500
500
500
1325
2000
1925
1350
1100
1650
1600
ANALYSIS:
Enter into a short put on 6th Jan at Rs 3.4

By holding it till 7th Feb ,we can reduce the loss to Rs.100
ANNEXURE: 3
3. SAIL
Investment
p/l
DATE
3rd Jan 2014
3333333333333
LOW
PRICE
183.5
187.1
184.2
184.1
178
175.1
171
172.5
171.3
159.25
156.4
157.5
162
Buy Stock
@187.95
CLOSE
TOTAL
PRICE
QTY
VALUE
P/L
187.95
1000
187950
0
189.2
1000
189200
1250
185.55
1000
185550
-2400
185.15
1000
185150
-2800
178.85
1000
178850
-9100
177.25
1000
177250
-10700
175.65
1000
175650
-12300
177
1000
177000
-10950
172.3
1000
172300
-15650
161.4
1000
161400
-26550
157.15
1000
157150
-30800
162
1000
162000
-25950
169.75
1000
169750
-18200
187950
-27550
SYMBOL DATE
HIGHPRICE
SAIL
3-Jan-14
188.4
SAIL
4-Jan-14
189.7
SAIL
5-Jan-14
188.4
SAIL
6-Jan-14
187.9
SAIL
7-Jan-14
186
SAIL
10-Jan-14
179.4
SAIL
11-Jan-14
177.8
SAIL
12-Jan-14
178.6
SAIL
13-Jan-14
179.8
SAIL
14-Jan-14
168
SAIL
17-Jan-14
162.9
SAIL
18-Jan-14
162.75
SAIL
19-Jan-14
171.5
104
-375
300
225
-350
-600
-50
-100
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
20-Jan-14
21-Jan-14
24-Jan-14
25-Jan-14
27-Jan-14
28-Jan-14
31-Jan-14
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
169.75
168.95
169
167.8
162.9
160.5
161.95
162.9
163
165.15
165.7
162.75
165.6
166.8
165
159.55
157.2
155.35
155.7
157.4
159.55
158.5
160.15
159
168.35
167.7
165.35
160.85
158.2
158.35
160.9
160.8
160.15
164.4
161.55
160.4
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
168350
167700
165350
160850
158200
158350
160900
160800
160150
164400
161550
160400
-19600
-20250
-22600
-27100
-29750
-29600
-27050
-27150
-27800
-23550
-26400
-27550
ANALYSIS:
As on3rd MARCH the amount invested in the shares of SAIL was Rs . 187950 by
purchasing the 1000 of shares at close price of RS.187.95
(1000 x 187.95 = 187950 )
But on 7th Feb the price of the shares of the company fell down to Rs. 160.4
Loss on 1 share by selling the shares on 7th February 187.95 160.4= 27.55
Thus by selling the shares after holding it till 7th Feb ,the total loss of Rs. -27550
was observed.
a. SHORT FUTURE:
DATE:3rd Jan 2014
Investment
p/l
SYMBOL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
176050
-15250
Short future @176.05

DATE
HIGHPRICE LOW PRICE CLOSE PRICE QTY TOTAL VALUE P/L
7-Jan-14
182
175.25
176.05 1000
176050
0
10-Jan14
176.5
172.5
174.15 1000
174150 -1900
11-Jan14
174.5
166.75
172.85 1000
172850 -3200
12-Jan14
175.5
169.55
174.1 1000
174100 -1950
13-Jan14
176.5
167.7
168.9 1000
168900 -7150
14-Jan14
165.1
158.2
160.05 1000
160050 -16000
17-Jan14
161.25
155.45
156.05 1000
156050 -20000
104
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
18-Jan14
19-Jan14
20-Jan14
21-Jan14
24-Jan14
25-Jan14
27-Jan14
28-Jan14
31-Jan14
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
163.65
171.8
170
169.55
168.9
168.55
163.65
161.15
162.7
163.4
163.4
165.75
166.05
162.9
158.6
163
166
167.5
165.85
160.4
158.3
156.15
156.55
158.2
160.5
159.35
160.4
160
162.9
169.9
169.2
168.1
166.3
161.7
159
159.5
162.1
161.35
161.15
165.1
161.55
160.8
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
162900
169900
169200
168100
166300
161700
159000
159500
162100
161350
161150
165100
161550
160800
-13150
-6150
-6850
-7950
-9750
-14350
-17050
-16550
-13950
-14700
-14900
-10950
-14500
-15250
ANALYSIS:
b.SHORT PUT:
DATE
Investment
p/l
EXP.DAT
SYMBOL DATE
SAIL
7-Jan-14
SAIL
10-Jan-14
SAIL
11-Jan-14
SAIL
12-Jan-14
SAIL
13-Jan-14
SAIL
14-Jan-14
SAIL
17-Jan-14
SAIL
18-Jan-14
SAIL
19-Jan-14
3rd Jan 2014
9250
-31900
24-Feb-14
STK.PRICE
180
180
180
180
180
180
180
180
180
Short put @9.25

CLOSE SETTLE NO.OF
PRICE PRICE
CTRT QTY
TOT.VALUE
9.25
9.25
8
1000
9250
11
11
3
1000
11000
13
13
2
1000
13000
13
10.5
0
1000
13000
15.05
15.05
9
1000
15050
21.95
21.95
2
1000
21950
24.05
24.05
1
1000
24050
20
20
1
1000
20000
12.5
12.5
1
1000
12500
104
P/L
0
1750
3750
3750
5800
12700
14800
10750
3250
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
SAIL
20-Jan-14
21-Jan-14
24-Jan-14
25-Jan-14
27-Jan-14
28-Jan-14
31-Jan-14
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
180
180
180
180
180
180
180
180
180
180
180
180
12.5
15
16
20
20.9
23.8
23.8
23.8
23.8
23.8
23.8
23.8
17.2
15
16
20
20.9
23.8
20.35
20.15
20.5
17.05
19.15
19.85
0
1
1
4
1
1
0
0
0
0
0
0
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
12500
15000
16000
20000
20900
23800
23800
23800
23800
23800
23800
23800
3250
5750
6750
10750
11650
14550
14550
14550
14550
14550
14550
14550
ANALYSIS:
Enter into a short put on 7th Jan at Rs 9.25. So investment is 9.25 x 1000=9250
But the share price was increased to 23.8 on 7th February.
Profit on 1 share by selling the shares on 7th February 23.8 9.25 = 14.55
Hence, total profit by selling 1000 shares = 1000 x 14.55 = 14550
By holding it till 7th Feb ,we can earn the profit of Rs.14550
ANNEXURE4;
4.RELIANCE:
DATE
Investment
p/l
3rd Jan 2014
mmmmmmmmmmm
263900
-31637.5
Buy Stock @1055.6
LOW
SYMBOL
RELIANCE
RELIANCE
RELIANCE
RELIANCE
RELIANCE
RELIANCE
RELIANCE
RELIANCE
RELIANCE
RELIANCE
RELIANCE
RELIANCE
RELIANCE
RELIANCE
RELIANCE
DATE
HIGHPRICE PRICE
CLOSEPRICE QTY TOTALVALUE P/L
3-Jan-14
1066.5
1052.6
1055.6 250
263900
4-Jan-14
1079.9
1057.3
1077.1 250
269275
5-Jan-14
1090
1070
1075.8 250
268950
6-Jan-14
1091.4
1074.6
1085.6 250
271400
7-Jan-14
1087.75
1058
1065.4 250
266350
10-Jan-14
1070.45
1021.2
1033.45 250
258362.5
11-Jan-14
1048.7
998.6
1013.75 250
253437.5
12-Jan-14
1035.65
1003
1030.8 250
257700
13-Jan-14
1039.15
1011.1
1015.35 250
253837.5
14-Jan-14
1029.8
998
1001.5 250
250375
17-Jan-14
1008
992.05
997.9 250
249475
18-Jan-14
1008
990
994.85 250
248712.5
19-Jan-14
1005
975
980.15 250
245037.5
20-Jan-14
977.6
954.55
969.85 250
242462.5
21-Jan-14
992.5
973
986.8 250
246700
104
0
5375
5050
7500
2450
-5537.5
-10462.5
-6200
-10062.5
-13525
-14425
-15187.5
-18862.5
-21437.5
-17200
RELIANCE
RELIANCE
RELIANCE
RELIANCE
RELIANCE
4RELIANC
24-Jan-14
25-Jan-14
27-Jan-14
28-Jan-14
31-Jan-14
995.9
984.95
967.4
945.9
928.85
964.1
956.25
940
902
903.1
971.6
958.5
942.7
913
919.3
250
250
250
250
250
242900
239625
235675
228250
229825
-21000
-24275
-28225
-35650
-34075
E
RELIANCE
RELIANCE
RELIANCE
RELIANCE
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
927.7
927.9
947.5
947.4
938.8
888.55
907.3
915
913.15
914.4
895.5
921.3
943.9
920
929.05
250
250
250
250
250
223875
230325
235975
230000
232262.5
-40025
-33575
-27925
-33900
-31637.5
ANALYSIS:
As on3rd MARCH the amount invested in the shares of SAIL was Rs . 263900 by
purchasing the 250 number of shares at close price of Rs1055.6
(250 x 1055.6 = 263900)
Hence, total loss by selling 250 shares = 250 x 126.55 = 31637.5
Thus by selling the shares after holding it till 7th Feb ,the total loss of Rs. 31637.5
was observed.
a.SHORT FUTURE:
DATE
Investment
p/l
EXP.DATE
3rd Jan 2014
255712.5
-22487.5
24-Feb-14
Short future
@1022.85
CLOSE
SYMBOL
RELIANC
DATE
HIGHPRICE LOWPRICE PRICE
QTY
TOTALVALUE
P/L
E
RELIANC
11-Jan-14
1060.35
1006
1022.85
250
255712.5
E
RELIANC
12-Jan-14
1046.25
1010.65
1042.8
250
260700
4987.5
E
RELIANC
13-Jan-14
1049
1019.55
1023.3
250
255825
112.5
14-Jan-14
1040.9
1005.1
1009
250
252250
-3462.5
104
RELIANC
E
RELIANC
17-Jan-14
1016.6
1000.05
1007.85
250
251962.5
-3750
E
RELIANC
18-Jan-14
1017.6
996.6
1005.1
250
251275
-4437.5
E
RELIANC
19-Jan-14
1014.4
984
989.55
250
247387.5
-8325
-
E
RELIANC
20-Jan-14
985
964.35
980
250
E
RELIANC
21-Jan-14
999
981.65
993.95
250
248487.5
-7225
E
RELIANC
24-Jan-14
1002.9
972.25
979.85
250
244962.5
-10750
E
RELIANC
25-Jan-14
991
965
966.75
250
241687.5
-14025
E
RELIANC
27-Jan-14
974
946.25
949.75
250
237437.5
-18275
E
RELIANC
28-Jan-14
951.85
908.3
920.55
250
230137.5
-25575
E
RELIANC
31-Jan-14
935
908
925.75
250
231437.5
-24275
E
RELIANC
1-Feb-14
932.3
895
901.55
250
225387.5
-30325
E
RELIANC
2-Feb-14
931
910.1
923.75
250
230937.5
-24775
E
RELIANC
3-Feb-14
949.4
917.15
946.45
250
236612.5
-19100
E
RELIANC
4-Feb-14
948.4
913.6
919.45
250
229862.5
-25850
-
7-Feb-14
943.4
914.5
932.9
250
245000 10712.5
233225 22487.5
ANALYSIS:
So, the amount of investment is (250 x 1022.85 = 255712.5
Loss on 1 share by selling the shares on 7th February 1022.85 932.9= 89.95
Hence, total loss by selling 250 shares = 250 x 89.95 = 22487.5
By holding it till 7TH Feb,we may reduce the loss Rs 31637.5 from to 22487.
104
b.SHORT PUT:
Investment
p/l
EXP.DATE
SYMBOL
RELIANC
DATE
DATE
3rd Jan 2014
STK.PRICE
CL.PRICE
Short put @20.1

SET.PRICE NO.OFCTRT
5025
15337.5
24-Feb-14
QTY
TOT.VALUE
P/L
E
RELIANC
11-Jan-14
1020
20.1
40
250
5025
E
RELIANC
12-Jan-14
1020
26.3
26.3
250
6575
1550
E
RELIANC
13-Jan-14
1020
35
35
250
8750
3725
E
RELIANC
14-Jan-14
1020
28.6
28.6
250
7150
2125
E
RELIANC
17-Jan-14
1020
45.5
45.5
250
11375
6350
E
RELIANC
18-Jan-14
1020
45.5
44.45
250
11375
6350
E
RELIANC
19-Jan-14
1020
39
39
250
9750
4725
E
RELIANC
20-Jan-14
1020
69.55
69.55
250
17387.5
12362.5
E
RELIANC
21-Jan-14
1020
47.45
47.45
18
250
11862.5
6837.5
E
RELIANC
24-Jan-14
1020
54
54
250
13500
8475
E
RELIANC
25-Jan-14
1020
65.9
65.9
10
250
16475
11450
E
RELIANC
27-Jan-14
1020
76.4
76.4
27
250
19100
14075
E
RELIANC
28-Jan-14
1020
108.8
108.8
19
250
27200
22175
E
RELIANC
31-Jan-14
1020
108.8
99.05
250
27200
22175
E
RELIANC
1-Feb-14
1020
125
125
250
31250
26225
E
RELIANC
2-Feb-14
1020
96.45
96.45
12
250
24112.5
19087.5
E
RELIANC
3-Feb-14
1020
81.45
81.45
250
20362.5
15337.5
E
RELIANC
4-Feb-14
7-Feb-14
1020
1020
81.45
81.45
100.2
91.3
0
0
250
250
20362.5
20362.5
15337.5
15337.5
104
ANALYSIS:

So the amount invested is (250 x 20.1= 5025 )
But on 7th February, the share price goes up to 81.45
Hence, total profit by selling 250 shares = 250 x 61.35 = 15337.5
By holding it till 7th Feb ,we can earn the profit of Rs. 15337.5
ANNEXURE 5
5.BHARTI AIRTEL:
Investment
p/l
SYMBOL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
DATE
3rd Jan 2014
LOW
Buy Stock @359.35

CLOSE
359350
-25500
TOTAL
DATE
HIGHPRICE PRICE
PRICE
QTY
VALUE
P/L
3-Jan-14
365
354.75
359.35
1000
359350
0
4-Jan-14
361.85
353.15
356.4
1000
356400
-2950
5-Jan-14
356.05
347.55
349
1000
349000 -10350
6-Jan-14
355.3
349.15
353.2
1000
353200
-6150
7-Jan-14
354.8
334.4
338.5
1000
338500 -20850
10-Jan-14
343.95
335.05
339.1
1000
339100 -20250
11-Jan-14
346.9
334
338.45
1000
338450 -20900
12-Jan-14
351.25
336
349.1
1000
349100 -10250
13-Jan-14
354
345.1
346.65
1000
346650 -12700
14-Jan-14
351.45
341.25
343.75
1000
343750 -15600
17-Jan-14
352
339.65
348.5
1000
348500 -10850
18-Jan-14
351.35
343.1
344.4
1000
344400 -14950
19-Jan-14
348.4
341.7
344.45
1000
344450 -14900
20-Jan-14
343
338
340.3
1000
340300 -19050
21-Jan-14
339.95
331
336.05
1000
336050 -23300
24-Jan-14
337.9
332.5
333.1
1000
333100 -26250
25-Jan-14
340.85
333.1
337.75
1000
337750 -21600
27-Jan-14
340
324.25
325.65
1000
325650 -33700
28-Jan-14
332.25
322.5
327.25
1000
327250 -32100
31-Jan-14
323.65
311
319
1000
319000 -40350
1-Feb-14
327.85
310
317.1
1000
317100 -42250
2-Feb-14
325.8
304.45
322.8
1000
322800 -36550
104
BHARTIARTL
BHARTIARTL
BHARTIARTL
3-Feb-14
4-Feb-14
7-Feb-14
342.45
343.5
344.25
320.45
330.5
332
339.8
332.5
333.85
1000
1000
1000
339800
332500
333850
-19550
-26850
-25500
ANALYSIS:
As on3rd MARCH the amount invested in the shares of BHARTIARTL was Rs.
359350 by purchasing the 1000 number of shares at close price of 359.35
(1000 x 359.35 = 359350)
Hence, total loss by selling 1000 shares = 1000 x 25.5= 25500
Thus by selling the shares after holding it till 7th Feb ,the total loss of Rs. 25500
was observed.
a. SHORT FUTURE:
DATE
Investment
p/l
EXP.DATE
3rd Jan 2014
353000
-19250
24-Feb-14
Short future @353
TOTAL
SYMBOL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
BHARTIARTL
DATE
5-Jan-14
6-Jan-14
7-Jan-14
10-Jan-14
11-Jan-14
12-Jan-14
13-Jan-14
14-Jan-14
17-Jan-14
18-Jan-14
19-Jan-14
20-Jan-14
21-Jan-14
24-Jan-14
25-Jan-14
27-Jan-14
28-Jan-14
31-Jan-14
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
HIGHPRICE LOWPRICE CLOSEPRICE QTY

VALUE
P/L
358.2
352.1
353
1000
353000
0
358.25
354.9
356.35
1000
356350
3350
357.75
338.4
341.05
1000
341050
-11950
346.8
338.05
342.25
1000
342250
-10750
349
336.75
341.35
1000
341350
-11650
353.5
338.1
352.4
1000
352400
-600
355.9
347
348.45
1000
348450
-4550
353.6
344.3
345.4
1000
345400
-7600
353.35
340.6
350.2
1000
350200
-2800
352.5
346.4
347.3
1000
347300
-5700
350
344.8
346.3
1000
346300
-6700
345
339.95
342.8
1000
342800
-10200
340
334
338.8
1000
338800
-14200
339.7
335.4
336
1000
336000
-17000
342.8
335.8
338.6
1000
338600
-14400
340.95
326.95
328.1
1000
328100
-24900
333.4
323.75
328.3
1000
328300
-24700
323.75
313.1
320.15
1000
320150
-32850
328.8
309.35
315.55
1000
315550
-37450
326.95
305.15
322.7
1000
322700
-30300
341.8
321.55
339.55
1000
339550
-13450
343.5
330.05
331.75
1000
331750
-21250
341.95
332.2
333.75
1000
333750
-19250
104
ANALYSIS:
Enter into short future on 6th Jan at Rs.353
So, the amount of investment is (1000 x 353=35300)
But on 7th February the share price fall down to 333.75
Loss on 1 share by selling the shares on 7th February 353 333.75 = 19.25
b..SHORT PUT:
DATE
Investment
50000
p/l
10000
EXP.DATE
3rd Jan 2014
24-Feb-14
Short put @50
SYMBOL
DATE
STK.PRICE
CLOSEPRICE
SETTLEPRICE
NO.OFCTRT
QTY
TOT.VALUE
P/L
BHARTIARTL
5-Jan-14
400
50
50
1000
50000
BHARTIARTL
6-Jan-14
400
50
46.85
1000
50000
BHARTIARTL
7-Jan-14
400
60
60
1000
60000
10000
BHARTIARTL
10-Jan-14
400
60
59.45
1000
60000
10000
BHARTIARTL
11-Jan-14
400
60
59.75
1000
60000
10000
BHARTIARTL
12-Jan-14
400
60
51.15
1000
60000
10000
BHARTIARTL
13-Jan-14
400
60
52.8
1000
60000
10000
BHARTIARTL
14-Jan-14
400
60
54.95
1000
60000
10000
BHARTIARTL
17-Jan-14
400
60
50.65
1000
60000
10000
BHARTIARTL
18-Jan-14
400
60
54.05
1000
60000
10000
BHARTIARTL
19-Jan-14
400
60
53.75
1000
60000
10000
BHARTIARTL
20-Jan-14
400
60
57.45
1000
60000
10000
BHARTIARTL
21-Jan-14
400
60
61.35
1000
60000
10000
BHARTIARTL
24-Jan-14
400
60
64.25
1000
60000
10000
BHARTIARTL
25-Jan-14
400
60
60.1
1000
60000
10000
BHARTIARTL
27-Jan-14
400
60
72.15
1000
60000
10000
BHARTIARTL
28-Jan-14
400
60
70.65
1000
60000
10000
BHARTIARTL
31-Jan-14
400
60
78.95
1000
60000
10000
BHARTIARTL
1-Feb-14
400
60
80.9
1000
60000
10000
104
BHARTIARTL
2-Feb-14
400
60
75.3
1000
60000
10000
BHARTIARTL
3-Feb-14
400
60
59.2
1000
60000
10000
BHARTIARTL
4-Feb-14
400
60
66.15
1000
60000
10000
BHARTIARTL
7-Feb-14
400
60
64.9
1000
60000
10000
ANALYSIS:
Enter into a short put on 6th Jan at Rs 50
So, the amount of investment is (1000 x 50 = 50000)
But on 7th February, the share price goes up to 60
Profit on 1 share by selling the shares on 7th February 60 50 = 10
Hence, total loss by selling 1000 shares = 1000 x 10 = 10000
By holding it till 7th Feb ,we can earn the profit of Rs. 10000
ANNEXURE 6:
6.TATA STEEL:
Investment
p/l
SYMBOL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
DATE
3rd Jan 2014
LOW
Buy Stock @704.1

CLOSE
TOTAL
352050
-31850
DATE
QTY
VALUE P/L
3-Jan-14
707.5
685.1
704.05
500 352025
0
4-Jan-14
713.9 693.25
694.7
500 347350
-4675
5-Jan-14
696.65 677.25
680.95
500 340475 -11550
6-Jan-14
690.85
681.5
683.3
500 341650 -10375
7-Jan-14
687.95 656.15
661.25
500 330625 -21400
10-Jan-14
665.7
645
650.7
500 325350 -26675
11-Jan-14
660.4 640.75
646.55
500 323275 -28750
12-Jan-14
658.6 626.25
648.9
500 324450 -27575
13-Jan-14
656
635
637.55
500 318775 -33250
14-Jan-14
636.6
617.5
622.45
500
311225 -40800
17-Jan-14
628
613.2
625.65
500 312825 -39200
18-Jan-14
638.8
627
632.6
500 316300 -35725
19-Jan-14
644.5 633.05
639.6
500 319800 -32225
20-Jan-14
643.25
630.6
634.2
500 317100 -34925
21-Jan-14
635
627
629.55
500 314775 -37250
24-Jan-14
652.3
625
649.25
500 324625 -27400
25-Jan-14
664.5
650.3
655.35
500 327675 -24350
27-Jan-14
660.4
647.3
650.1
500 325050 -26975
28-Jan-14
654.5
630.2
637.45
500 318725 -33300
31-Jan-14
641.95
618
639.7
500 319850 -32175
1-Feb-14
642.8
627.1
631.75
500 315875 -36150
2-Feb-14
634.95
615.8
626.25
500 313125 -38900
104
TATASTEEL
TATASTEEL
TATASTEEL
3-Feb-14
4-Feb-14
7-Feb-14
640.9
652
645.5
625.7
632
634.1
638.1
635.9
640.4
500
500
500
319050
317950
320200
-32975
-34075
-31825
ANALYSIS:
As on3rd MARCH the amount invested in the shares of TATASTEEL was Rs .
352050 by purchasing the 500 number of shares at close price of Rs.704.1
(500 x 704.1 = 352050)
was observed
a. SHORT FUTURE:
DATE
Investment
p/l
EXP.DATE
3rd Jan 2014
343500
-22700
24-Feb-14
Short future
LOW
SYMBOL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
DATE
5-Jan-14
6-Jan-14
7-Jan-14
10-Jan-14
11-Jan-14
12-Jan-14
13-Jan-14
14-Jan-14
17-Jan-14
18-Jan-14
@687
CLOSE
TOTAL

QTY VALUE
P/L
698.7
683.2
687
500
343500
0
695.2
686.3
689
500
344500
1000
692.05 659.05
662.5
500
331250
-12250
667.5
647.9
652.1
500
326050
-17450
663
637.3
645.55
500
322775
-20725
652.05
620.2
644.05
500
322025
-21475
650
629.5
631.65
500
315825
-27675
633.85
612
618
500
309000
-34500
621.5 609.15
619.75
500
309875
-33625
632.5
621.3
629.85
500
314925
-28575
104
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
TATASTEEL
19-Jan-14
20-Jan-14
21-Jan-14
24-Jan-14
25-Jan-14
27-Jan-14
28-Jan-14
31-Jan-14
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
639.35
637.8
631.2
645.4
655.5
651
649.8
639.5
642.5
637.7
643.7
655.3
646.8
630.55
625.25
622.05
619.25
641.7
640.1
622.55
616
627.2
617.95
628.5
634.65
635.65
634.85
630.95
624.1
643.4
645.05
642.3
628.95
637.15
630.6
629.5
641.3
637.55
641.6
500
500
500
500
500
500
500
500
500
500
500
500
500
317425
315475
312050
321700
322525
321150
314475
318575
315300
314750
320650
318775
320800
-26075
-28025
-31450
-21800
-20975
-22350
-29025
-24925
-28200
-28750
-22850
-24725
-22700
ANALYSIS:
Enter into short future on 6th Jan at Rs. 687

So, the amount of investment is (500 x 687 = 343500 )
b. SHORT PUT:
DATE
Investment
p/l
EXP.DATE
3rd Jan 2014
10125
24-Feb-14
Short put @20.25
CLOSE SETTLE NO.OF
SYMBOL
DATE
STK.PRICE PRICE
PRICE
CTRT
QTY TOT.VALUE
P/L
TATASTEEL
5-Jan-14
660
20.25
20.25
500
10125
TATASTEEL
6-Jan-14
660
20.25
21.25
500
10125
TATASTEEL
7-Jan-14
660
27
27
500
13500
3375
TATASTEEL
10-Jan-14
660
29.2
29.2
500
14600
4475
TATASTEEL
11-Jan-14
660
30
30
10
500
15000
4875
TATASTEEL
12-Jan-14
660
36.85
36.85
500
18425
8300
TATASTEEL
13-Jan-14
660
44.85
44.85
500
22425 12300
TATASTEEL
14-Jan-14
660
47.95
47.95
500
23975 13850
104
TATASTEEL
17-Jan-14
660
56
56
500
28000 17875
TATASTEEL
18-Jan-14
660
56
39.9
500
28000 17875
TATASTEEL
19-Jan-14
660
35.8
35.8
16
500
17900
TATASTEEL
20-Jan-14
660
40.5
40.5
13
500
20250 10125
TATASTEEL
21-Jan-14
660
43
43
500
21500 11375
TATASTEEL
24-Jan-14
660
31.7
31.7
119
500
15850
5725
TATASTEEL
25-Jan-14
660
29.2
29.2
145
500
14600
4475
TATASTEEL
27-Jan-14
660
29.25
29.25
112
500
14625
4500
TATASTEEL
28-Jan-14
660
39.25
39.25
77
500
19625
9500
TATASTEEL
31-Jan-14
660
33.75
33.75
25
500
16875
6750
TATASTEEL
1-Feb-14
660
38.5
38.5
23
500
19250
9125
TATASTEEL
2-Feb-14
660
38.8
38.8
33
500
19400
9275
TATASTEEL
3-Feb-14
660
30.25
30.25
66
500
15125
5000
TATASTEEL
4-Feb-14
660
30.95
30.95
148
500
15475
5350
TATASTEEL
7-Feb-14
660
28.35
28.35
52
500
14175
4050
7775
ANALYSIS:
So, the amount of investment is (500 x 20.25 = 10125)
ANNEXURE 7:
7. INFOSYS TECH:
Investment
p/l
SYMBOL
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
DATE
3rd Jan 2014
LOW
Buy Stock @3458.4

CLOSE
TOTAL
432293.75
-46363
DATE
QTY
VALUE
P/L
3-Jan-14
3469.7
3427.7
3458.4
125 432293.75
0
4-Jan-14
3499
3457
3481.5
125 435181.25 2887.5
5-Jan-14
3477
3445.1
3459.6
125
432450 156.25
104
INFOSYSTCH
6-Jan-14
3493
3444.1
3478.2
125 434768.75
2475
-
INFOSYSTCH
INFOSYSTCH
7-Jan-14
10-Jan-14
3495
3443.15
3356.35
3352
3370.8
3395.8
125 421343.75
125 424468.75
10950
-7825
-
INFOSYSTCH
11-Jan-14
3423.4
3288.1
3325.7
125
415712.5
16581
-
INFOSYSTCH
12-Jan-14
3390
3318.2
3377.3
125
422162.5
10131
-
INFOSYSTCH
13-Jan-14
3299
3195
3205.2
125
400650
31644
-
INFOSYSTCH
14-Jan-14
3277.9
3185
3204.3
125
400537.5
31756
-
INFOSYSTCH
17-Jan-14
3281.7
3191.25
3268.8
125
408600
23694
-
INFOSYSTCH
18-Jan-14
3335.7
3250
3323
125
415375
16919
-
INFOSYSTCH
19-Jan-14
3314
3235.8
3249.6
125
406200
26094
-
INFOSYSTCH
20-Jan-14
3307.4
3218.1
3295.9
125
411987.5
20306
-
INFOSYSTCH
21-Jan-14
3278
3231
3243.9
125 405481.25
26813
-
INFOSYSTCH
24-Jan-14
3290
3227.3
3284.7
125 410581.25
21713
-
INFOSYSTCH
25-Jan-14
3304.85
3236.05
3259.7
125 407456.25
24838
-
INFOSYSTCH
27-Jan-14
3269
3185.5
3196.9
125
399612.5
32681
-
INFOSYSTCH
28-Jan-14
3268.55
3140.65
3168.2
125 396018.75
36275
-
INFOSYSTCH
31-Jan-14
3138.5
3086.2
3117.7
125
389712.5
42581
-
INFOSYSTCH
1-Feb-14
3128.4
3043.1
3089.2
125
386150
46144
-
INFOSYSTCH
INFOSYSTCH
2-Feb-14
3-Feb-14
3164
3153
3065
3086.2
3089.3
3117.6
125 386156.25
125
389700
46138
-
104
42594
INFOSYSTCH
4-Feb-14
3123.7
3026.4
3047.9
125
380987.5
51306
-
INFOSYSTCH
7-Feb-14
3113.9
3061
3087.5
125 385931.25
46363
ANALYSIS:
As on3rd MARCH the amount invested in the shares INFOSYSTCH was Rs .
432293.75 by purchasing the 125 number of shares at close price of Rs. 3458.4
(125 x 3458.4 = 432293.75)
But on 7th Feb the price of the shares of the company fell down to Rs3087.5
was observed
a.SHORT FUTURE:
DATE
Investment
p/l
EXP.DATE
3rd Jan 2014
425300
-39519
24-Feb-14
SYMBOL
INFOSYSTCH
INFOSYSTCH
DATE
7-Jan-14
10-Jan-14
HIGHPRICE
3520.35
3459
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
11-Jan-14
12-Jan-14
13-Jan-14
14-Jan-14
17-Jan-14
3436.85
3407.4
3320
3303.85
3294.95
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
18-Jan-14
19-Jan-14
20-Jan-14
21-Jan-14
24-Jan-14
3346.75
3337.05
3318.5
3289.35
3299
104
Short future @3402.4

LOW
CLOSE
TOTAL
PRICE PRICE
QTY
VALUE
P/L
3390.9
3402.4
125
425300
0
3371.5
3409.8
125
426225
925
3315
3355.7
125 419462.5 5837.5
3338.1
3389.8
125
423725 -1575
3222
3230.1
125 403762.5 -21538
3211.6
3231
125
403875 -21425
3218.15
3285.3
125 410662.5 -14638
3283.45
3338.1
125 417262.5 8037.5
3250
3262.7
125 407831.25 -17469
3238.55
3305.6
125 413193.75 -12106
3242
3261.2
125 407643.75 -17656
3237
3287.3
125 410912.5 -14388
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
25-Jan-14
27-Jan-14
28-Jan-14
31-Jan-14
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
3308
3250
3271.7
3156.45
3141.4
3171.7
3163.5
3131.4
3114.95
3250
3202
3152
3101.2
3056
3081.2
3097
3028
3064.9
3261.2
3211.7
3187.4
3133.8
3102.4
3101.3
3127.7
3050.9
3086.3
125
125
125
125
125
125
125
125
125
407650
401462.5
398418.75
391718.75
387800
387662.5
390956.25
381362.5
385781.25
-17650
-23838
-26881
-33581
-37500
-37638
-34344
-43938
-39519
ANALYSIS:
So, the amount of investment is (125 x 3402.4 = 425300 )
c. SHORT PUT:
DATE
Investment
p/l
EXP.DATE
SYMBOL
DATE
INFOSYSTCH
7-Jan-14
INFOSYSTCH 10-Jan-14
3rd Jan
2014
4687.5
22893.75
24-Feb-14
STK.PRICE CLOSEPRICE
3250
37.5
3250
64.95
3250
81
3250
53.4
3250
105
3250
105
3250
105
3250
54
3250
75
3250
75
3250
82
3250
62
3250
74.6
3250
92
104
Short put @37.5

SETTLE NO.OF
PRICE
CTRT QTY
TOT.VALUE P/L
51.2
0
125
4687.5
0
64.95
4
125
8118.75 3431.25
81
1
125
10125
5437.5
53.4
4
125
6675
1987.5
105
2
125
13125
8437.5
149.45
0
125
13125
8437.5
117.05
0
125
13125
8437.5
54
1
125
6750
2062.5
75
1
125
9375
4687.5
101.95
0
125
9375
4687.5
82
1
125
10250
5562.5
62
8
125
7750
3062.5
74.6
44
125
9325
4637.5
92
11
125
11500
6812.5
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
INFOSYSTCH
28-Jan-14
31-Jan-14
1-Feb-14
2-Feb-14
3-Feb-14
3250
3250
3250
3250
3250
115
115
190
190
190
115
170.75
190
182.95
160.35
25
0
3
0
0
125
125
125
125
125
INFOSYSTCH
INFOSYSTCH
4-Feb-14
7-Feb-14
3250
3250
220.65
220.65
220.65
178.35
3
0
125
125
14375
14375
23750
23750
23750
9687.5
9687.5
19062.5
19062.5
19062.5
27581.25 22893.75
27581.25 22893.75
ANALYSIS:
So, the amount of investment is 125 x 37.5 = 4687.5
Hence, total profit by selling 125 shares = 125 x 183.15 = 22893.75
By holding it till 7th Feb ,we can earn the profit of Rs. 22893.75
ANNEXURE 8.:
8. TATA MOTORS:
DATE
Investment
p/l
3rd Jan 2014
654225
-81050
Buy Stock
LOW
SYMBOL
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
@1308.45
CLOSE
TOTAL
DATE
HIGHPRICE PRICE
PRICE
QTY
VALUE
P/L
3-Jan-14
1335
1301.2
1308.45
500
654225
0
4-Jan-14
1320.6 1285.05
1298.4
500
649200
-5025
5-Jan-14
1309.9
1276
1282.8
500
641400 -12825
6-Jan-14
1300.9 1248.35
1261
500
630500 -23725
7-Jan-14
1263.35
1160
1190.2
500
595100 -59125
10-Jan-14
1206.9
1157.4
1176.7
500
588350 -65875
11-Jan-14
1198.9 1140.55
1158.05
500
579025 -75200
12-Jan-14
1223.1
1176
1218
500
609000 -45225
13-Jan-14
1246.95
1212
1236.7
500
618350 -35875
14-Jan-14
1225
1172
1182.4
500
591200 -63025
17-Jan-14
1188
1155.5
1178.85
500
589425 -64800
18-Jan-14
1208.6
1182
1199.55
500
599775 -54450
19-Jan-14
1207.9
1183.3
1192.75
500
596375 -57850
20-Jan-14
1202 1162.15
1194.7
500
597350 -56875
21-Jan-14
1204 1172.35
1187.4
500
593700 -60525
24-Jan-14
1197.8
1175.1
1188.3
500
594150 -60075
104
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
25-Jan-14
27-Jan-14
28-Jan-14
31-Jan-14
1198.8
1199.5
1189.9
1159
1159.9
1171
1122
1112.1
1166
1195.85
1150.3
1147.05
500
500
500
500
583000
597925
575150
573525
-71225
-56300
-79075
-80700
-
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
1151.45
1128.9
1164.5
1189.95
1159.85
1063
1077.3
1094
1140
1110.8
1069.05
1114.25
1156.8
1150.85
1146.35
500
500
500
500
500
534525
557125
578400
575425
573175
119700
-97100
-75825
-78800
-81050
ANALYSIS:
As on3rd MARCH the amount invested in the shares TATAMOTORS was Rs
654225 by purchasing the 500 number of shares at close price of Rs. 1308.45
(500 x 1308.45 = 654225 )
But on 7th Feb the price of the shares of the company fell down to Rs 1146.35
was observed
a. SHORT FUTURE:
DATE
Investment
p/l
EXP.DATE
3rd Jan 2014
630550
-62775
24-Feb-14
Short future
LOW
@1261.1
CLOSE
TOTAL
SYMBOL
TATAMOTORS
DATE
6-Jan-14

QTY
VALUE
P/L
1299.05 1241.15
1261.1
500
630550
0
-
TATAMOTORS
7-Jan-14
1262
1185.5
1196.9
500
598450
32100
-
TATAMOTORS
10-Jan-14
1204.9
1160
1175.9
500
587950
42600
-
TATAMOTORS
11-Jan-14
1198.75 1139.95
1157.85
500
578925
51625
-
TATAMOTORS
TATAMOTORS
12-Jan-14
13-Jan-14
1216.5 1172.75
1232
1197
1213.15
1220.95
500
500
606575
610475
23975
-
104
20075
TATAMOTORS
14-Jan-14
1220 1166.15
1172.45
500
586225
44325
-
TATAMOTORS
17-Jan-14
1177.05 1146.85
1168.3
500
584150
46400
-
TATAMOTORS
18-Jan-14
1198 1176.25
1193.7
500
596850
33700
-
TATAMOTORS
19-Jan-14
1205 1170.25
1179.25
500
589625
40925
-
TATAMOTORS
20-Jan-14
1196
1154.1
1189.8
500
594900
35650
-
TATAMOTORS
21-Jan-14
1197.1 1167.45
1184.4
500
592200
38350
-
TATAMOTORS
24-Jan-14
1190
1169.5
1180.75
500
590375
40175
-
TATAMOTORS
25-Jan-14
1215
1147
1153
500
576500
54050
-
TATAMOTORS
27-Jan-14
1187.2
1163.5
1180.05
500
590025
40525
-
TATAMOTORS
28-Jan-14
1179.6
1115
1138.75
500
569375
61175
-
TATAMOTORS
31-Jan-14
1154.6
1106.7
1145.8
500
572900
57650
-
TATAMOTORS
1-Feb-14
1146
1064.1
1069.8
500
534900
95650
-
TATAMOTORS
2-Feb-14
1122.8 1077.35
1104.15
500
552075
78475
-
TATAMOTORS
3-Feb-14
1161 1088.65
1153.65
500
576825
53725
-
TATAMOTORS
4-Feb-14
1181.55
1128
1136.85
500
568425
62125
-
TATAMOTORS
7-Feb-14
1151.85 1098.65
1135.55
500
567775
62775
ANALYSIS:
So, the amount of investment is (500 x 1261.1 = 630550 )
104

Hence, total loss by selling 500 shares = 500 x 125.55 =62775
b. SHORT PUT:
Investment
p/l
EXP.DATE
SYMBOL
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
DATE
6-Jan-14
7-Jan-14
10-Jan-14
11-Jan-14
12-Jan-14
13-Jan-14
14-Jan-14
17-Jan-14
18-Jan-14
19-Jan-14
20-Jan-14
21-Jan-14
24-Jan-14
25-Jan-14
27-Jan-14
28-Jan-14
31-Jan-14
1-Feb-14
2-Feb-14
3-Feb-14
4-Feb-14
7-Feb-14
DATE
3rd Jan 2014
CLS
Short put @18

SET.
NO.OF
9000
24-Feb-14
STK.PRICE PRICE PRICE

CTRT
QTY TOT.VAL
1150
18
18
8
500
9000
1150
40
40
8
500
20000
1150
44.1
44.1
4
500
22050
1150
43.95
43.95
2
500
21975
1150
43.95
43.55
0
500
21775
1150
32.25
32.25
6
500
16125
1150
50
50
1
500
25000
1150
45.95
45.95
4
500
22975
1150
35
35
86
500
17500
1150
41.95
41.95
14
500
20975
1150
35.65
35.65
20
500
17825
1150
35.2
35.2
37
500
17600
1150
35.25
35.25
15
500
17625
1150
45.05
45.05
93
500
22525
1150
32.05
32.05
424
500
16025
1150
51.6
51.6
656
500
25800
1150
52.8
52.8
198
500
26400
1150
102.65
102.65
268
500
51325
1150
75.1
75.1
115
500
37550
1150
54.45
54.45
782
500
27225
1150
62.05
62.05
1363
500
31025
1150
62.25
62.25
553
500
31125
ANALYSIS:
So the amount of investment is (500 x 18 = 9000)
Profit on 1 share by selling the shares on 7th February 62.25 18 = 44.25
104
P/L
0
11000
13050
12975
12775
7125
16000
13975
8500
11975
8825
8600
8625
13525
7025
16800
17400
42325
28550
18225
22025
22125
ANNEXURE 9:
9. RELIANCE CAPITAL:
DATE
3rd Jan 2014
Investment 341250
p/l
-94325
Buy Stock
LOW
@682.5
CLOSE
TOTAL
SYMBOL
DATE
HIGHPRICE PRICE PRICE QTY VALUE
P/L
RELCAPITAL
3-Jan-14
687.5 671.35
682.5
500
341250
0
RELCAPITAL
4-Jan-14
687
667
677.1
500
338550
-2700
RELCAPITAL
5-Jan-14
680.05 654.05
656.1
500
328050
-13200
RELCAPITAL
6-Jan-14
665 654.05
659.9
500
329950
-11300
RELCAPITAL
7-Jan-14
661.85
630
633.8
500
316900
-24350
RELCAPITAL 10-Jan-14
641.9
606.6
612.05
500
306025
-35225
622.8
595
607.9
500
303950
-37300
631.95
600.5
629.55
500
314775
-26475
636.7
616.2
621.65
500
310825
-30425
632.9 600.05
613.2
500
306600
-34650
600
566.6
574.05
500
287025
-54225
587.85
568.4
579.45
500
289725
-51525
589
576
581.35
500
290675
-50575
588.9
570
585.25
500
292625
-48625
594.9
582
586.65
500
293325
-47925
589.9 578.85
583.4
500
291700
-49550
587.9 576.75
579.9
500
289950
-51300
585.05 554.55
558.9
500
279450
-61800
561 527.25
536.3
500
268150
-73100
534
517.5
523.7
500
261850
-79400
RELCAPITAL
1-Feb-14
528.65
497.6
501.5
500
250750
-90500
RELCAPITAL
2-Feb-14
509.8
491
496.05
500
248025
-93225
RELCAPITAL
3-Feb-14
508.85
489.3
504.65
500
252325
-88925
RELCAPITAL
4-Feb-14
515.95
490
493.1
500
246550
-94700
RELCAPITAL
7-Feb-14
502.8
484.1
493.85
500
246925
-94325
ANALYSIS:
As on3rd MARCH the amount invested in the shares RELCAPITAL was
Rs 341250 by purchasing the 500 number of shares at close price of Rs. 682.5
(500 x 682.5 =341250)
But on 7th Feb the price of the shares of the company fell down to Rs . 493.85
104
was observed
a.SHORT FUTURE:
DATE
Investment
p/l
EXP.DATE
3rd Jan 2014
332825
-84825
24-Feb-14
Short future
LOW
SYMBOL
DATE
RELCAPITAL
6-Jan-14
RELCAPITAL
7-Jan-14
RELCAPITAL
10-Jan-14
RELCAPITAL
11-Jan-14
RELCAPITAL
12-Jan-14
RELCAPITAL
13-Jan-14
RELCAPITAL
14-Jan-14
RELCAPITAL
17-Jan-14
RELCAPITAL
18-Jan-14
RELCAPITAL
19-Jan-14
RELCAPITAL
20-Jan-14
RELCAPITAL
21-Jan-14
RELCAPITAL
24-Jan-14
RELCAPITAL
25-Jan-14
RELCAPITAL
27-Jan-14
RELCAPITAL
28-Jan-14
RELCAPITAL
31-Jan-14
RELCAPITAL
1-Feb-14
RELCAPITAL
2-Feb-14
RELCAPITAL
3-Feb-14
RELCAPITAL
4-Feb-14
RELCAPITAL
7-Feb-14
@665.65
CLOSE
TOTAL

QTY
VALUE
P/L
671.6
661.45
665.65
500
332825
1100
665.4
635.65
639.9
500
319950
-11775
646
613.75
616.45
500
308225
-23500
626.8
600
610.5
500
305250
-26475
635.4
603.65
633.65
500
316825
-14900
640
620.5
625.2
500
312600
-19125
636.5
605.1
616.25
500
308125
-23600
605
570
576.1
500
288050
-43675
590
571.95
582.95
500
291475
-40250
592.65
578.85
584.7
500
292350
-39375
592
578.15
589.35
500
294675
-37050
599.2
586.5
591.8
500
295900
-35825
595.5
583.85
588.45
500
294225
-37500
592
581.4
583.5
500
291750
-39975
586.3
559.65
563.95
500
281975
-49750
562.95
532
540.6
500
270300
-61425
536.7
520.35
527.25
500
263625
-68100
530.95
501.3
504.6
500
252300
-79425
511.95
487.9
499.3
500
249650
-82075
512
491.6
508
500
254000
-77725
519.5
491.1
494.95
500
247475
-84250
504.95
485.6
496
500
248000
-84825
ANALYSIS:
104

But on 7th February the share price fall down to 496
Loss on 1 share by selling the shares on 7th February 665.65 496 = 169.65
b.SHORT PUT:
Investment
7500
p/l
EXP.DATE
24-Feb-14
Short put @15
NO.OF
CLS
SYMBOL
DATE
STK.PRICE PRICE SET.PRICE CTRT
QTY TOT.VALUE
P/L
RELCAPITAL
5-Jan-14
620
15
15
500
7500
RELCAPITAL
6-Jan-14
620
15
16.7
500
7500
RELCAPITAL
7-Jan-14
620
15
27.85
500
7500
RELCAPITAL
10-Jan-14
620
24.85
24.85
500
12425
4925
RELCAPITAL
11-Jan-14
620
24.85
38.5
500
12425
4925
RELCAPITAL
12-Jan-14
620
24.85
30
500
12425
4925
RELCAPITAL
13-Jan-14
620
24.85
32.2
500
12425
4925
RELCAPITAL
14-Jan-14
620
31.9
31.9
500
15950
8450
RELCAPITAL
17-Jan-14
620
31.9
62.5
500
15950
8450
RELCAPITAL
18-Jan-14
620
31.9
57.85
500
15950
8450
RELCAPITAL
19-Jan-14
620
31.9
55.2
500
15950
8450
RELCAPITAL
20-Jan-14
620
31.9
51.5
500
15950
8450
RELCAPITAL
21-Jan-14
620
40.55
40.55
500
20275 12775
RELCAPITAL
24-Jan-14
620
45.5
45.5
500
22750 15250
RELCAPITAL
25-Jan-14
620
45.35
45.35
500
22675 15175
RELCAPITAL
27-Jan-14
620
51.5
51.5
500
25750 18250
RELCAPITAL
28-Jan-14
620
51.5
85.55
500
25750 18250
RELCAPITAL
31-Jan-14
620
51.5
95.95
500
25750 18250
RELCAPITAL
1-Feb-14
620
51.5
116.85
500
25750 18250
RELCAPITAL
2-Feb-14
620
51.5
121.85
500
25750 18250
RELCAPITAL
3-Feb-14
620
51.5
113.6
500
25750 18250
RELCAPITAL
4-Feb-14
620
51.5
124.7
500
25750 18250
RELCAPITAL
7-Feb-14
620
51.5
124.1
500
25750 18250
104
ANALYSIS:
Profit on 1 share by selling the shares on 7th February 51.5 15 = 36.5
By holding it till 7th Feb, we can earn the profit of Rs. 18250
ANNEXURE 10:
10. HINDUSTAN UNILEVER:
DATE
Investment
p/l
3rd Jan 2014
DDDDDDDDDDDDDDF
313150
-38800
Buy Stock
@313.15
CLOSE
SYMBOL
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
TOTAL
DATE
HIGHPRICE LOWPRICE PRICE
QTY
VALUE
P/L
3-Jan-14
315.9
310
313.15
1000
313150
0
4-Jan-14
329.9
313.5
320.9
1000
320900
7750
5-Jan-14
327.35
317.25
325.7
1000
325700
12550
6-Jan-14
328.8
312.4
320.75
1000
320750
7600
7-Jan-14
322.9
310.6
313.05
1000
313050
-100
10-Jan-14
317.65
306.5
309
1000
309000
-4150
11-Jan-14
312.5
303.3
307.95
1000
307950
-5200
12-Jan-14
310.5
301.6
304.9
1000
304900
-8250
13-Jan-14
307.15
300.25
302.2
1000
302200
-10950
14-Jan-14
313.2
301.55
302.55
1000
302550
-10600
17-Jan-14
305.5
300
301.65
1000
301650
-11500
18-Jan-14
304.8
300.5
301.85
1000
301850
-11300
19-Jan-14
303.75
298.45
299.65
1000
299650
-13500
20-Jan-14
301
296.35
299.9
1000
299900
-13250
21-Jan-14
300.95
297
298.2
1000
298200
-14950
24-Jan-14
302
296
297.95
1000
297950
-15200
25-Jan-14
303
280.55
281.9
1000
281900
-31250
27-Jan-14
283
270
270.7
1000
270700
-42450
28-Jan-14
275
267
271.95
1000
271950
-41200
31-Jan-14
276.95
266.4
271.15
1000
271150
-42000
1-Feb-14
274
267
269.65
1000
269650
-43500
2-Feb-14
276.55
269.1
274.6
1000
274600
-38550
3-Feb-14
282.2
272.5
278.95
1000
278950
-34200
4-Feb-14
279.4
271.5
272.95
1000
272950
-40200
7-Feb-14
277
271.5
274.35
1000
274350
-38800
ANALYSIS:
104
As on3rd MARCH the amount invested in the shares HINDUNILVR was Rs.
313150 by purchasing the 1000 number of shares at close price of Rs. 313.15
(1000 x 313.15 = 313150)
th
But on 7 Feb the price of the shares of the company fell down to Rs . 274.35
was observed
a.SHORT FUTURE:
DATE 3rd Jan 2014
SSDSSSSSSSSSSSSSSSSS
Investmnt
309000
p/l
-34650
EXP.DATE
24-Feb-14
Short future
LOW
SYMBOL
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
HINDUNILVR
@309
CLOSE
TOTAL
DATE
QTY
VALUE
P/L
10-Jan-14
317.65
306.5
309
1000
309000
11-Jan-14
312.5
303.3
307.95
1000
307950
12-Jan-14
310.5
301.6
304.9
1000
304900
13-Jan-14
307.15
300.25
302.2
1000
302200
14-Jan-14
313.2
301.55
302.55
1000
302550
17-Jan-14
305.5
300
301.65
1000
301650
18-Jan-14
304.8
300.5
301.85
1000
301850
19-Jan-14
303.75
298.45
299.65
1000
299650
20-Jan-14
301
296.35
299.9
1000
299900
21-Jan-14
300.95
297
298.2
1000
298200
24-Jan-14
302
296
297.95
1000
297950
25-Jan-14
303
280.55
281.9
1000
281900
27-Jan-14
283
270
270.7
1000
270700
28-Jan-14
275
267
271.95
1000
271950
31-Jan-14
276.95
266.4
271.15
1000
271150
1-Feb-14
274
267
269.65
1000
269650
2-Feb-14
276.55
269.1
274.6
1000
274600
104
0
-1050
-4100
-6800
-6450
-7350
-7150
-9350
-9100
-10800
-11050
-27100
-38300
-37050
-37850
-39350
-34400
HINDUNILVR
HINDUNILVR
HINDUNILVR
3-Feb-14
4-Feb-14
7-Feb-14
282.2
279.4
277
272.5
271.5
271.5
278.95
272.95
274.35
1000
1000
1000
278950
272950
274350
-30050
-36050
-34650
ANALYSIS:
Enter into short future on 6th Jan at Rs. 309
c. SHORT PUT:
DATE
SYMBOL
Investment
1100
p/l
EXP.DATE
9700
24-Feb-14
DATE
3rd Jan 2014
CLS.
STK.PRICE PRICE
Short put @1.1

NO.OF
SET.PRICE CTRT
QTY TOT.VAL
P/L
HINDUNILVR
10-Jan-14
280
1.1
2.25
1000
1100
HINDUNILVR
11-Jan-14
280
1.1
2.1
1000
1100
HINDUNILVR
12-Jan-14
280
1.1
2.35
1000
1100
HINDUNILVR
13-Jan-14
280
1.1
2.6
1000
1100
HINDUNILVR
14-Jan-14
280
1.95
1.95
1000
1950
850
HINDUNILVR
17-Jan-14
280
2.45
2.45
1000
2450
1350
HINDUNILVR
18-Jan-14
280
2.35
2.35
1000
2350
1250
HINDUNILVR
19-Jan-14
280
2.8
2.8
1000
2800
1700
HINDUNILVR
20-Jan-14
280
2.65
2.65
1000
2650
1550
HINDUNILVR
21-Jan-14
280
2.65
1.7
1000
2650
1550
HINDUNILVR
24-Jan-14
280
2.1
2.1
1000
2100
1000
HINDUNILVR
25-Jan-14
280
8.45
8.45
109
1000
8450
7350
HINDUNILVR
27-Jan-14
280
13.1
13.1
177
1000
13100 12000
HINDUNILVR
28-Jan-14
280
11.4
11.4
51
1000
11400 10300
104
HINDUNILVR
31-Jan-14
280
14.1
14.1
22
1000
14100 13000
HINDUNILVR
1-Feb-14
280
15
15
1000
15000 13900
HINDUNILVR
2-Feb-14
280
10.8
10.8
62
1000
10800
9700
HINDUNILVR
3-Feb-14
280
7.6
7.6
37
1000
7600
6500
HINDUNILVR
4-Feb-14
280
11.25
11.25
26
1000
11250 10150
HINDUNILVR
7-Feb-14
280
10.8
10.8
1000
10800
ANALYSIS:
104
9700
CONCLUSIONS
Derivatives market is an innovation to cash market. Approximately
its daily turnover reaches to the equal stage of cash market. The
average daily turnover of the NSE derivative segments
In cash market the profit/loss of the investor depend the market
price of the underlying asset. The investor may incur Hugh profit ts
or he may incur Hugh loss. But in derivatives segment the investor
enjoys Hugh profits with limited downside.
In cash market the investor has to pay the total money, but in
derivatives the investor has to pay premiums or margins, which are
some percentage of total money.
Derivatives are mostly used for hedging purpose.
In derivative segment the profit/loss of the option writer is purely
depend on the fluctuations of the underlying asset.
104
SUGGESTIONS
In bullish market the call option writer incurs more losses so the
investor is suggested to go for a call option to hold, where as the
put option holder suffers in a bullish market, so he is suggested to
write a put option.
In bearish market the call option holder will incur more losses so
the investor is suggested to go for a call option to write, where as
the put option writer will get more losses, so he is suggested to hold
a put option.
In the above analysis the market price of ONGC is having low
volatility, so the call option writer enjoys more profits to holders.
The derivative market is newly started in India and it is not known
by every investor, so SEBI has to take steps to create awareness
among the investors about the derivative segment.
In order to increase the derivatives market in India, SEBI should
revise some of their regulations like contract size, participation of
FII in the derivatives market.
Contract size should be minimized because small investors cannot
afford this much of huge premiums.
SEBI has to take further steps in the risk management mechanism.
SEBI has to take measures to use effectively the derivatives
segment as a tool of hedging.
104
BIBLIOGRAPHY
BOOKS : Derivatives Dealers Module Work Book - NCFM
Financial Market and Services - GORDAN &
NATRAJAN
Financial Management - PRASANNA CHANDRA
NEWS PAPERS : Economic times
Times of India
Business Standard
MAGAZINES : Business Today
Business world
Business India
WEBSITES :
www.derivativesindia.com
www.indianinfoline.com
www.nseindia.com
www.bseindia.com
www.sebi.gov.in
www.google.com(Derivatives market)
104
MARKET WATCH WINDOWS

BLUE COLOUR INDICATE SHARE VALUE INCREASE
RED COLOUR INDICATE SHARE VALUE DECREASE
NSE SCRIPS
Figure 7.1
104
NSE & BSE SCRIPS
Figure 7.2
104
BUY ORDER FORM
Figure 7.3
104
SELL ORDER FORM
Figure 7.4
104
MARKET DEPTH
Figure 7.5
104
TRADE BOOK
Figure 7.6
104
CLIENT MARGIN
Figure 7.7
104
ORDER BOOK
Figure 7.8
104
CLIENT ACTIVITY REPORT
Figure 7.9
104
MESSAGE REPORT
Figure 7.10
104
EXERCISE REPORT
Figure 7.11
104
TRADING SCRIPS IN DIALOGUE BOX
Figure 7.12
104
LIST OF ABBREVIATIONS
BSE
Bombay Stock Exchange
NSE
National Stock Exchange
ISE
Inter-connected Stock Exchange
ABC
Additional Base Capital
BMC
Base Minimum Capital
NSDL
National Securities Depository Ltd.
CDSL
Central Depositories Services Ltd.
CM
Capital Market
Co.
Company
DCA
Department of Company Affairs
DEA
Department of Economic Affairs
DP
Depository Participant
DPG
Dominant Promoter Group
DQ
Disclosed Quantity
DvP
Delivery versus Payment
FI
Financial Institution
FII
Foreign Institutional Investors
F&O
Futures and Options
FTP
File Transfer Protocol
IOC
Immediate or Cancel
IPF
Investor Protection Fund

104
ISIN
International Securities Identification Number
LTP
Last Trade Price
MBP
Market by Price
MTM
Mark to Market
NSCCL
National Securities Clearing Corporation Limited
OTC
Over the Counter
NEAT
National Exchange for Automated Trading
NCFM
NSE's Certification in Financial Markets
RBI
Reserve Bank of India
RDM
Retail Debt Market
SAT
Securities Appellate Tribunal
SBTS
Screen Based Trading System
SC(R)A
Securities Contracts (Regulation) Act, 1956
SC(R)R
Securities Contracts (Regulation) Rules, 1957
SEBI
Securities and Exchange Board of India
SGF
Settlement Guarantee Fund
SRO
Self Regulatory Organization
T+2
Second day from the trading day
TM
Trading Member
UTI
Unit Trust of India
VaR
Value at Risk
VSAT
Very Small Aperture Terminal
WDM
Wholesale Debt Market
104

Derivatives (Futures and Options) - Sharekhan

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Derivatives (Futures & Options)

The underlying asset can be equity, Forex,

commodity or any other asset.

Derivatives (Futures & Options)

HISTORY OF DERIVATIVES MARKETS

However credit risk

remained a serious problem. To deal with this problem, a group of Chicago;

Other popular international exchanges that trade

derivatives are LIFFE in England, DTB in Germany, SGX in Singapore, TIFFE

Derivatives (Futures & Options)

THE GROWTH OF DERIVATIVES MARKET

Derivatives (Futures & Options)

DERIVATIVE PRODUCTS (TYPES)

Derivatives (Futures & Options)

Derivatives (Futures & Options)

PARTICIPANTS IN THE DERRIVATIVES MARKETS

Thus derivatives help in

discovery of future as well as current prices.

Derivatives (Futures & Options)

Margining, monitoring and

surveillance of the activities of various participants become extremely

SCOPE OF THE STUDY

Derivatives (Futures & Options)

OBJECTIVES OF THE STUDY

Derivatives (Futures & Options)

NATURE OF THE PROBLEM

SEBI thought the

Introduction of the derivatives trading, as a first step it has set up a 24 member

Derivatives (Futures & Options)

1. Price or dividend (interest)

Derivatives (Futures & Options)

International Financial Futures Exchange (LIFFE)

currency & Interest rate futures)

Derivatives (Futures & Options)

Derivatives (Futures & Options)

corporations/houses complying with the eligibility as laid down by the

Derivatives (Futures & Options)

Doubtful debts and advances

Rs.2 Lakh. Exchanges have to submit details of the futures contract

Derivatives (Futures & Options)

BETA not more than 4 ( previous last 6 months )

DESCRIPTION OF THE METHOD

Derivatives (Futures & Options)

It is standardized contract with standard underlying instrument, a

Derivatives (Futures & Options)

Derivatives (Futures & Options)

DISTINCTION BETWEEN FUTURES AND FORWARDS CONTRACTS

3. hence more liquid

3. hence less liquid

Derivatives (Futures & Options)

PARTIES IN THE FUTURES CONTRACT

Derivatives (Futures & Options)

PAY-OFF FOR A BUYER OF FUTURES

Derivatives (Futures & Options)

PAY-OFF FOR A SELLER OF FUTURES

Derivatives (Futures & Options)

Derivatives (Futures & Options)

Spot Price of the Underlying

Cost of financing (using continuously compounded

Time till expiration in years

Spot price of the underlying

Cost of financing (or) interest Rate