Commodity options and futures trading india ppt


For this reason, its available only in English. The article is super and your patience in answering each comment here is commendable too. This is the first article I read on your site and am interested enough to start at Module 1, chapter 1! Thank you, Karthik, for your efforts in creating and maintaining this varsity. If Ajay pays Rs. Hey In the case that the land price remains 5L, Ajay should be neutral and not opposed to buying the land. In fact, the amount paid as premium should not factor into his decision on whether to buy or sell the land.

Can a stop loss be placed for options? If yes does it remain valid intra day and we have to manually place it again next day or does it remain valid once placed till it is triggered? Commodities go on till Then is there are any chances that my premium value comes to zero? In fact, you can square off anytime before the expiry. Thank you sir for reply.

Suppose 1 day before expiry it is trading at 50 CE. Suppose 1 day before expiry it is trading at 5CE. Suppose in swing trade , I am in loss in this contract and did not close my position on expiry ON 3. Capital gains will be taxed based on your income bracket.

Suggest you read this module on taxation — https: And also if market trends up again till Jan my prize also goes up? Or am I obligated to hold that position till expiry? Both buyers and sellers of options have the flexibility to square off their positions anytime they wish, no need to wait for expiry. And as per expectations price and premium goes up therefore i wanted to book profit.

I was entering exit order at market price but everytime order was getting rejected. When we buy option we have right to exercise it any time then why my order was rejected? After entering exit order for minimum times my sell order gets executed n i earned profit. So, please tell me whether i was doing any wrong process or there is something about call square off before expiry which i dont know..

Sir, I was not getting any error. At end instead of selling at market price i clicked on limit price that time my order gets executed.

Ah, I get it. We do not allow market order for stock option, it has to be a limit order. This is because of the lack of liquidity and the associated volatility. Also, whenever an order is rejected, there will be a rejection reason which is displayed. That will give you the information. Is it easy to sell this huge qty on expiry day? As you have mentioned in the module Call Options , the loss is limited to the premium that we paid.

Infact it went down. Since the price went down, I did not sell the stock as i do not want to take more loss. The loss when you buy an option call or put is restricted to the extent of the premium paid. Hence, your loss here would be Theoretically, when PE increases, CE should decrease and vice-versa. Options premiums have multiple forces acting on them simultaneously. The direction of the market is just one of them. But the answer to your query is because of Volatility.

Increase in volatility increases option premiums and vice versa. I need to execute the below orders 1. Buy 1 lot of Bank Nifty options i. Sell 1 lot of Bank Nifty options i. The maximum loss I can incur is around and the maximum profit is around , then why do I need 59K? Is it a requirement from Exchanges? I bought Reliance Call at Rs. If I buy option for intraday MIS as order. Can we expect monthly unlimited plans for options traders or derivative segments?

Because of this plan so many peoples are preferring to open account in ProStocks especially day traders. Hope you will come with some plans for day traders too like investors, there is no doubt about your services one of the best broker in India thank you so much for this.

Sunil, multiple plans only confuse clients. Now can i square-off my position at this stage or do i have to wait mandatory till the contract expire. No extra charges for this. If you leave the option to expiry, that is considered as expressing your interest to exercise the option. Please clear my doubt regarding options trading. I purchase 1 lot of the same. Can I book profit by selling that 1 lot even though the stock has not hit the strike price? Two days later, it went all way up to Rs.

Finally, it expired worthless resulting in a loss. If I buy any stock in option,and I want to sell in stock in profit,so I can wait for my expiry date or before I can book profit. There are only 3 possible scenarios, out which 2 indeed benefit Venu.

Statistically, Venu has You have considered all possible outcomes equally probable. I get your point, Rayan. Perhaps I should have worded it better.

What I really meant to say was — out of the 3 possible outcomes, 2 favor Venu. This gives Venu an edge, but like you mentioned, all the three scenarios have an equal probability of occurrence. I guess you did not understand my question.. I just have a query. Is it necessary for the option contract to cross the strike price to be in profit.

Or we can book profit by squaring off on the same day or days after if the premium is increased, but still the strike price is not reached. Eg — Purchased Put option of Nifty with a strike price of 67 squared off at premium , but the strike price of is not reached yet.

And how to calculate profit after the contract crosses the strike price?? Your profit will be the difference between the buy and sell price of the strike…i. All my doubts are cleared now regarding the calculation of profit. I am feeling more confident now. Upone expiry, if you exercise your option and If STT is more than intrinsic value, then zerodha will automatically lapse it.

You need to check this, Sandeep — https: Regarding the new rule of product suitability to curb retail participation in fno products will this be extended even to intraday stock trading with leverage BO and CO orders or is it limited to only futures and options?

Hi Just opened an account with Zeroda. Nothing really, you just need to have enough margins. You can use this for figuring out the margins required — https: Hello, I am new to trading. I want to trade in Call and Put options. Kindly guide me How and Where to start. Here is a quick recap of the history of the Indian derivative markets — June 12th — Index futures were launched June 4th —Index options were launched July 2nd — Stock options were launched November 9th — Single stock futures were launched.

Ajay wants to play it safe, he thinks through the whole situation and finally proposes a special structured arrangement to Venu, which Ajay believes is a win-win for both of them, the details of the arrangement is as follows — Ajay pays an upfront fee of Rs. Consider this as a non refundable agreement fees that Ajay pays Against this fees, Venu agrees to sell the land after 6 months to Ajay The price of the sale which is expected 6 months later is fixed today at Rs.

Do note, he is fixing a price and paying an additional Rs. However irrespective of what happens to the highway, there are only three possible outcomes — Once the highway project comes up, the price of the land would go up, say it shoots up to Rs. Scenario 1 — Price goes up to Rs. So how much money is Ajay making? Scenario 2 — Price goes down to Rs.

Here is the math that explains why it does not make sense to buy the land — Remember the sale price is fixed at Rs. Scenario 3 — Price stays at Rs. Agreed Ajay would lose 1 lakh, but the best part is that Ajay knows his maximum loss which is 1 lakh before hand. Hence there are no negative surprises for him.

Also, as and when the land prices increases, so would his profits and therefore his returns. He would lose a lot of money if the land prices increases after 6 months right? Well, think about it. The agreement is entered after the exchange of 1 lakh, hence 1 lakh is the price of this option agreement. As a thumb rule, in an options agreement the buyer always has a right and the seller has an obligation I would suggest you be absolutely thorough with this example.

Let us now proceed to understand the same example from the stock market perspective. And they are- The stock price can go up, say Rs. Now that we are through with the various concepts, let us understand options and their associated terms Variable Ajay — Venu Transaction Stock Example Remark Underlying 1 acre land Stock Do note the concept of lot size is applicable in options. So just like in the land deal where the deal was on 1 acre land, not more or not less, the option contract will be the lot size Expiry 6 months 1 month Like in futures there are 3 expiries available Reference Price Rs.

We will understand the logic soon Regulator None, based on good faith Stock Exchange All options are cash settled, no defaults have occurred until now. 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Mail will not be published required. Introduction to Stock Markets 14 chapters 2. Technical Analysis 20 chapters 3. The secondary market for a variety of assets can vary from loans to stocks, from fragmented to centralized, and from illiquid to very liquid. The major stock exchanges are the most visible example of liquid secondary markets - in this case, for stocks of publicly traded companies.

Exchanges such as the New York Stock Exchange, Nasdaq and the American Stock Exchange provide a centralized, liquid secondary market for the investors who own stocks that trade on those exchanges.

Loans sometimes trade online using a Loan Exchange. Over-the-counter OTC or off-exchange trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. It is contrasted with exchange trading, which occurs via facilities constructed for the purpose of trading i. OTC stocks are not usually listed nor traded on any stock exchanges, though exchange listed stocks can be traded OTC on the third market. An over-the-counter contract is a bilateral contract in which two parties agree on how a particular trade or agreement is to be settled in the future.

It is usually from an investment bank to its clients directly. Forwards and swaps are prime examples of such contracts. It is mostly done via the computer or the telephone. For derivatives, these agreements are usually governed by an International Swaps and Derivatives Association agreement.

The NYMEX has created a clearing mechanism for a slate of commonly traded OTC energy derivatives which allows counterparties of many bilateral OTC transactions to mutually agree to transfer the trade to ClearPort, the exchange's clearing house, thus eliminating credit and performance risk of the initial OTC transaction counterparts.. A promissory note , referred to as a note payable in accounting, or commonly as just a "note", is a contract where one party the maker or issuer makes an unconditional promise in writing to pay a sum of money to the other the payee , either at a fixed or determinable future time or on demand of the payee, under specific terms.

They differ from IOUs in that they contain a specific promise to pay, rather than simply acknowledging that a debt exists. A certificate of deposit or CD is a time deposit , a financial product commonly offered to consumers by banks, thrift institutions, and credit unions.

They are different from savings accounts in that the CD has a specific, fixed term often three months, six months, or one to five years , and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest.

Bond - an issued security establishing its holder's right to receive from the issuer of the bond, within the time period specified therein,.

The bond may provide for other property rights of its holder, where this is not contrary to legislation. Common shares represent ownership in a company and a claim dividends on a portion of profits.

Investors get one vote per share to elect the board members, who oversee the major decisions made by management. Over the long term, common stock, by means of capital growth, yields higher returns than almost every other investment. This higher return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, and preferred shareholders are paid.

Preferred share represents some degree of ownership in a company but usually doesn't come with the same voting rights. This may vary depending on the company. With preferred shares investors are usually guaranteed a fixed dividend forever. This is different than common stock, which has variable dividends that are never guaranteed. Another advantage is that in the event of liquidation preferred shareholders are paid off before the common shareholder but still after debt holders.

Preferred stock may also be callable, meaning that the company has the option to purchase the shares from shareholders at any time for any reason usually for a premium. Some people consider preferred stock to be more like debt than equity. Professional participants in the securities markets - legal persons, including credit organizations, and also citizens registered as business persons who conduct the following types of activity:.

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