contents derivatives futures. options. technical analysis. fundamental analysis. market

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Contents Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market .

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Page 1: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

ContentsContents

Derivatives Futures. Options.

Technical analysis.

Fundamental analysis.

Market .

Page 2: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

TATAMOTORSTATAMOTORSTataMotors FuturesJun 01, 2009 = 78000Jun 16, 2009 = 131640Profit = 53640.Returns in % = 68%.

Page 3: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

BHARTIBHARTIBHARTI FuturesOct 1, 2009 = 44000Oct 28, 2009 = 0.Loss.

Page 4: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

HULHULHUL OptionsJuly 13, 2009 = 500July 27, 2009 = 4000.Profit = Rs.3500

Page 5: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

RCOMRCOMRCOM OptionsOct 5, 2009 = 7700Oct 29, 2009 = 0Loss

Page 6: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

Uses of derivatives:Uses of derivatives:

Hedging

Arbitrage

Buy on Margin

Page 7: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

Cash MarketCash Market

Derivative Derivative MarketMarket

Page 8: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

DERIVATIVESDERIVATIVES

Page 9: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

Derivative Definition:Derivative Definition:‘derivative’ refers to an asset

that has no independent value, but ‘derives’

its value

from that of an underlying asset.

Page 10: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

ExamplesExamplesCurd, which is derivative of milk.Price of the curd depends on the

price of the milk.ADR like Satyam, Infosys etc.

Page 11: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

DERIVATIVES

FUTURES OPTIONS

LONGSHOR

TCALL PUT

Page 12: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

FuturesFuturesFutures are exchange-traded

contracts to buy or sell an asset in future at a price agreed upon today.

The asset can be share, index, interest rate, bond, rupee-dollar exchange rate, sugar, crude oil, soybean, cotton, coffee etc.

Page 13: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

Types of FuturesTypes of FuturesIndex Futures : are derivative

contracts, which have the index value (Nifty, Sensex etc) as the underlying asset.

Stock Futures : are derivative contracts that have an equity share as the underlying asset.

Page 14: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

PremiumPremium

Future > Spot

5300 > 5250

Prm = 50

Future < Spot

5250 < 5300

Disc = 50

DiscountDiscount

Page 15: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

Date Nifty Spot Nifty Fut Prm/Disc

1-Jan-08 6144 6161 16

2-Jan-08 6179 6223 44

3-Jan-08 6179 6175 3

4-Jan-08 6274 6255 19

7-Jan-08 6279 6288 9

8-Jan-08 6288 6269 19

9-Jan-08 6272 6260 12

10-Jan-08 6157 6162 5

Page 16: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

DERIVATIVES

FUTURES OPTIONS

LONGSHOR

TCALL PUT

Page 17: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

Long Position in Long Position in FuturesFuturesBullish on stock or index.

Buy position on Future contract.

“To sell the contract on or before the expiration date.”

Page 18: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

LONGLONGBuy now sell

later.

BUYBUY

SELLSELL5800

5000

Page 19: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

5000

5800

BUYBUY

SELLSELL

Page 20: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

DERIVATIVES

FUTURES OPTIONS

LONGSHOR

TCALL PUT

Page 21: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

Short Position in Short Position in FuturesFuturesBearish on stock or index.

Sell Future contract.

“To buy the contract on or before the expiration date.”

Page 22: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

SHORTSHORTSell now buy

later.

BUYBUY

SELLSELL 5800

5000

Page 23: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

BUYBUY

SELLSELL 5800

5000

Page 24: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

LONGLONGBuy now sell

later.Sell now buy

later.

SHORTSHORT

BUYBUY

SELLSELL

BUYBUY

SELLSELL5800

5000

Page 25: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

Futures TradingFutures TradingLot size = 75.Future Price = 2800.Margin = 23%

Total Amt required to pay = 75 * 2800 * 23% = Rs.

48,300

Page 26: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

Uses:Uses:

Hedging

Arbitrage

Buy on Margin

Page 27: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

DERIVATIVES

FUTURES OPTIONS

LONGSHOR

TCALL PUT

Page 28: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

HedgingHedgingInsurance.

When people decide to hedge, they are insuring themselves against a negative event.

For example, if you buy house insurance, you are hedging yourself against fires, break-ins or other unforeseen disasters.

Page 29: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

75 shares.

Buy Price = 2800.

75 shares.

Short Position at 2800.

Market Price = 2000.

75 shares.Buy Price =

2800.Loss = 2000 - 2800 = -

800

75 shares.Buy Price =

2800.Profit = 2800-2000 =

800

Spot / cash Market

Future market

Page 30: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

ArbitrageArbitrageThe simultaneous purchase and

sale of an asset in order to profit from a difference in the price.

"riskless profit“.

Page 31: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

75 shares.

Buy Price = 2800.

75 shares.Short Position at

3000.

Market Price = 2000.75 shares.Buy Price =

2800.Loss = 2000 - 2800 = -

800

75 shares.Buy Price =

2800.Profit = 3000-2000 =

1000

Spot / cash Market

Future market

Net Profit/Loss = (-800+1000)*75 = 15000

Net Profit/Loss per share = (-800+1000) =200

Page 32: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

75 shares.

Buy Price = 2800.

75 shares.Short Position at

3000.

Market Price = 4000.75 shares.Buy Price =

2800.Loss = 4000 - 2800 =

1200

75 shares.Buy Price =

2800.Profit = 3000-4000 = -

1000

Spot / cash Market

Future market

Net Profit/Loss = (-800+1000)*75 = 15000

Net Profit/Loss per share = (-800+1000) =200

Page 33: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

Buying on MarginBuying on MarginReliance Industries.No of shares = 75.Price per share = 2800.

Spot / cash Market

Future market

Total Amt Paid =75 * 2800 = 2,10,000

Total Amt Paid =75 * 2800 *

23% = 48,300

Margin

Page 34: Contents Derivatives Futures. Options. Technical analysis. Fundamental analysis. Market

You have Rs.40000…….You have Rs.40000…….

2300*75*23% = 39675

= 40000 / 230017 shares

350 * 75 = 26250

350 * 17 = 5950

FUTURES SPOT / CASH

PRICE = 2300PRICE = 2300

PRICE = 2650PRICE = 2650