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Financial markets are, by nature, extremely volatile and hence the risk factor is
an important concern for financial agents. To reduce this risk, the concept of
derivatives comes into the picture. Derivatives are financial contracts, or
financial instruments, whose values are derived from the value of something
else (known as the underlying). The underlying on which a derivative is based
can be an asset (e.g., commodities, equities (stocks), residential mortgages,
commercial real estate, loans, bonds), an index (e.g., interest rates, exchange
rates, stock market indices), or other items (e.g., weather conditions, or other
derivatives). Credit derivatives are based on loans, bonds or other forms of
credit.
1.
The Thesis is focus on How Derivative Instruments used as an effective tool for
Hedging, Speculation and Arbitrage with the following objectives:
1.
2.
3.
4.
5.
6.
To study the risk and return profile, investment policies, and portfolio of
investors who trade in derivatives
7.
8.
2.
RESEARCH METHODOLOGY:
2
Research Design: A Research Design is the actual framework of a research that provides
specific details or information regarding the process to be followed while conducting the
research. The research is designed based on the objectives formulated. It includes all the
details regarding the research such as where the information sources, appropriate
measurement techniques and sampling process.
Sources of Data: The data collected for the management thesis include both Primary Data
and Secondary Data.
1. Primary Data: Primary data is data gathered for the first time by the researcher. The
sources of Primary Data for the project are as follows :
Questionnaires
Interviews
Books
Magazines
Internet.
Research Method: The Research Method used in this project to collect data will be
Survey Method. In this method, data will be collected through respondents, brokers, and the
head of the franchise directly with the help of Questionnaire and Personal Interview.
Sampling Procedure: The Primary data are collected by using non-probability sampling
i.e. convenience sampling with a sample size about 50 respondents.
3.
Every project / thesis has certain scope and limitation. Similarly, this thesis has
the following scope and limitations:
The study mainly focuses on Derivative Investors who invest derivative
instruments i.e. Futures & Options in Indian Stock Market.
The study carries a sample size of about 50 respondents.
The main constraints of the study are Time and Place i.e. due to limited time
period and coverage, the study may not possible in depth analysis.
LITERATURE REVIEW
1.
INTRODUCTION TO DERIVATIVES
In the Indian context the Securities Contracts (Regulation) Act, 1956 (SC(R)A) defines
"derivative" to include
1) A security derived from a debt instrument, share, loan whether secured or unsecured, risk
instrument or contract for differences or any other form of security.
2) A contract which derives its value from the prices, or index of prices, of underlying securities.
In recent years, the market for financial derivatives has grown tremendously in terms of variety of
instruments available, their complexity and also turnover. In the class of equity derivatives the world
over, futures and options on stock indices have gained more popularity than on individual stocks,
especially among institutional investors, who are major users of index-linked derivatives. Even small
investors find these useful due to high correlation of the popular indexes with various portfolios and
ease of uses.
3.
4.
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.
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.
4 . Swaps: Swaps are private agreements 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: These 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 cash flows in one direction being in a different currency than those in the opposite
direction.
5. 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 receive
floating.
1)
Hedgers: Hedgers face risk associated with the price of an asset. They use futures or
options markets to reduce or eliminate this risk.
2)
3)
2.
In recent years, derivatives have become increasingly important in the field of finance. While
futures and options are now actively traded on many exchanges, forward contracts are
popular on the OTC market.
Location of settlement
10
Options
The Nifty index fund industry will find it very useful to make a bundle of a Nifty index fund
and a Nifty put option to create a new kind of a Nifty index fund, which gives the investor
protection against extreme drops in Nifty. Selling put options is selling insurance, so anyone
who feels like earning revenues by selling insurance can set himself up to do so on the index
options market.
More generally, options offer "nonlinear payoffs" whereas futures only have "linear payoffs".
By combining futures and options, a wide variety of innovative and useful payoff structures
can be created.
11
3.
APPLICATION OF FUTURES
The phenomenal growth of financial derivatives across the world is attributed the fulfillment of
needs of hedgers, speculators and arbitrageurs by these products. In this chapter we first look at how
trading futures differs from trading the underlying spot. We then look at the payoff of these contracts,
and finally at how these contracts can be used by various entities in the economy.
A payoff is the likely profit/loss that would accrue to a market participant with change in the price of
the underlying asset. This is generally depicted in the form of payoff diagrams which show the
price of the underlying asset on the X-axis and the profits/losses on the Y-axis.
12
13
14
Where:
r = Cost of financing (using continuously compounded interest rate
T = Time till expiration in years
e = 2.71828
Example: Security XYZ Ltd trades in the spot market at Rs. l150. Money can be invested at 11%
p.a. The fair value of a one-month futures contract on XYZ is calculated as follows:
15
16
17
On day one, borrow funds; buy the security on the cash/spot market at 1000.
Take delivery of the security purchased and hold the security for a month.
On the futures expiration date, the spot and the futures price converge. Now unwind the position.
The result is a riskless profit of Rs.15 on the spot position and Rs.10 on the futures position.
When does it make sense to enter into this arbitrage? If your cost of borrowing funds to buy
the security is less than the arbitrage profit possible, it makes sense for you to arbitrage. This
is termed as cash-and-carry arbitrage.
18
On the futures expiration date, the spot and the futures price converge. Now unwind the position.
The result is a riskless profit of Rs.25 on the spot position and Rs.10 on the futures position.
If the returns you get by investing in riskless instruments are more than the return from the
arbitrage trades, it makes sense for you to arbitrage. This is termed as reverse-cash-and-carry
arbitrage. It is this arbitrage activity that ensures that the spot and futures prices stay in line
with the cost-of-carry.
19
4.
APPLICATION OF OPTIONS
Figure 4.1 : Payoff for investor who went Long Nifty at 2220
The above figure 4.1 shows the profits/losses from a long position on the index. The investor
bought the index at 2220. If the index goes up, he profits. If the index fall he losses.
20
Figure 4.2 : Payoff for investor who went Short Nifty at 2220
The above figure 4.2 shows the profits/losses from a short position on the index. The investor sold
the index at 2220. If the index falls, he profits. If the index rises, he loses.
21
22
23
24
25
The
Black/Scholes
done in
continuous
requires
equation
time.
is
This
continuous
compounding. The 'r" that figures in this is ln(l + r). Example: if the interest rate per annum is
12%, you need to use In 1.12 or 0.1133, which is the continuously compounded equivalent of
12% per annum.
N( ) is the cumulative normal distribution. N(di) is called the delta of the option which is a
measure of change in option price with respect to change in the price of the underlying asset.
26
27
28
Underlying
1250
1250
1250
1250
1250
Strike price of
Call Premium
Put Premium
option
1200
1225
1250
1275
1300
(Rs.)
80.10
63.65
49.45
37.50
27.50
(Rs.)
18.15
26.50
37.00
49.80
64.80
Table 4.1 : One Month Calls And Puts Trading At Different Strikes
Which of these options you choose largely depends on how strongly you feel about the likelihood
of the upward movement in the price, and how much you are willing to lose should this upward
movement not come about. There are five one-month calls and five one-month puts trading in the
market. The call with a strike of 1200 is deep in-the-money and hence trades at a higher
premium. The call with a strike of 1275 is out-of-the-money and trades at a low premium.
The call with a strike of 1300 is deep-out-of-money. Its execution depends on the unlikely event
that the underlying will rise by more than 50 points on the expiration date. Hence buying this call is
basically like buying a lottery. There is a small probability that it may be in-the-money by
expiration, in which case the buyer will make profits. In the more likely event of the call expiring
out-of-the-money, the buyer simply loses the small premium amount of Rs.27.50.
As a person who wants to speculate on the hunch that prices may rise, you can also do so by
selling or writing puts. As the writer of puts, you face a limited upside and an unlimited downside.
If prices do rise, the buyer of the put will let the option expire and you will earn the premium. If
however your hunch about an upward movement proves to be wrong and prices actually fall, then
your losses directly increase with the falling price level. If for instance the price of the underlying
falls to 1230 and you've sold a put with an exercise of 1300, the buyer of the put will exercise the
option and you'll end up losing Rs.70. Taking into account the premium earned by you when you
sold the put, the net loss on the trade is Rs.5.20.
Having decided to write a put, which one should you write? Given that there are a number of onemonth puts trading, each with a different strike price, the obvious question is: which strike
29
The spot price is 1250. There are five one-month calls and five one-month puts trading in the
market. The call with a strike of 1200 is deep in-the-money and hence trades at a higher premium.
The call with a strike of 1275 is out-of-the-money and trades at a low premium. The call with a
strike of 1300 is deep-out-of-money. Its execution depends on the unlikely event that the price of
underlying will rise by more than 50 points on the expiration date.
Hence buying this call is basically like buying a lottery. There is a small probability that it may be
in-the-money by expiration in which case the buyer will profit. In the more likely event of the call
expiring out-of-the-money, the buyer simply loses the small premium amount of Rs. 27.50.
Figure 4.7 shows the payoffs from buying calls at different strikes. Similarly, the put with a strike
of 1300 is deep in-the-money and trades at a higher premium than the at-the-money put at a strike
of 1250.
30
This largely depends on how strongly you feel about the likelihood of the upward movement in the
prices of the underlying. If you write an at-the-money put, the option premium earned by you will be
higher than if you write an out-of-the-money put. However the chances of an at-the-money put
being exercised on you are higher as well. In the example in Figure 4.8, at a price level of 1250,
one option is in-the-money and one is out-of-the-money. As expected, the in-the-money option
fetches the highest premium of Rs.64.80 whereas the out-of-the-money option has the lowest
premium of Rs. 18.15.
31
Price
Strike price of
Call Premium
Put Premium
option
1200
1225
1250
1275
1300
(Rs.)
80.10
63.65
49.45
37.50
27.50
(Rs.)
18.15
26.50
37.00
49.80
64.80
1250
1250
1250
1250
1250
Table 4.2 : One Month Calls And Puts Trading At Different Strikes
The above Table 4.2 gives the premiums for one month calls and puts with different strikes.
Given that there are a number of one-month calls trading, each with a different strike price,
the obvious question is: which strike should you choose ? Let us take a look at call options
with different strike prices.
32
Assume that the current stock price is 1250, risk-free rate is 12% per year and stock volatility
is 30%. Investor could write the following options:
1.
2.
3.
4.
5.
Which of these options you write largely depends on how strongly you feel about the
likelihood of the downward movement of prices and how much you are willing to lose should
this downward movement not come about. There are five one-month calls and five onemonth puts trading in die market.
The call with a strike of 1200 is deep in-the-money and hence trades at a higher premium.
The call with a strike of 1275 is out-of-the-money and trades at a low premium. The call with
a strike of 1300 is deep-out-of-money. Its execution depends on the unlikely event that the
stock will rise by more than 50 points on the expiration date. Hence writing this call is a
fairly safe bet.
There is a small probability that it may be in-the-money by expiration in which case the buyer
exercises and the writer suffers losses to the extent that the price is above 1300. In the more
likely event of the call expiring out-of-the-money, the writer earns the premium amount
ofRs.27.50.
As a person who wants to speculate on the hunch that the market may fall, you can also buy
puts. As the buyer of puts you face an unlimited upside but a limited downside. If the price
does fall, you profit to the extent the price falls below the strike of the put purchased by you.
If however your hunch about a downward movement in the market proves to be wrong and
the price actually rises, all you lose is the option premium.
33
If for instance the security price rises to 1300 and you've bought a put with an exercise of
1250, you simply let the put expire. If however the price does fall to say 1225 on expiration
date, you make a neat profit of Rs.25.
Having decided to buy a put, which one should you buy? Given that there are a number of
one-month puts trading, each with a different strike price, the obvious question is: which
strike should you choose? This largely depends on how strongly you feel about the likelihood
of the downward movement in the market. If you buy an at-the-money put, the option
premium paid by you will be higher than if you buy an out-of-the-money put. However the
chances of an at-the-money put expiring in-the-money are higher as well.
The spot price is 1250. There are five one-month calls and five one-month puts trading in the
market. The call with a strike of 1200 is deep in-the-money and hence trades at a higher premium.
The call with a strike of 1275 is out-of-the-money and trades at a low premium. The call with a strike
of 1300 is deep-out-of-money. Its execution depends on the unlikely event that the price will raise
by more than 50 points on the expiration date.
Hence writing this call is a fairly safe bet. There is a small probability that it may be in-the-money
by expiration in which case the buyer exercises and the writer suffers losses to the extent that the
price is above 1300. In the more likely event of the call expiring out-of-the-money, the writer earns
the premium amount of Rs.27.50. Figure 4.9 shows the payoffs from writing calls at different
strikes.
34
35
The figure 4.10 shows the profit/losses for a buyer of puts at various strike prices. The in-themoney option has the highest premium of Rs. 64.80 whereas the out-of-the money option has the
lowest premium of Rs. 18.50.
36
The study was conducted with the sample size of 50 and numbers of questions (shown in
exhibit) were asked to derivative traders to their demographic profile like age, income level,
etc. The details of study and analysis are as follows:
3.1
DEMOGRAPHIC PROFILE
The demographic profile of the derivative traders includes - Age, Occupation and Income
level are explain in details as under:
3.1.1 AGE:
Under this study, age of the derivative traders grouped under 4 categories Less than 30
Years, 30 40 Years, 40 50 Years and 50 and Above. From the survey, the age of group of
most derivatives are comes under Less than 30 Years i.e. 48% of the total 50 respondent. And
second highest derivative trader age group is 30 40 years comprises 44 % from the the total
sample size of 50 respondents. During the survey, the derivative traders that interviewed are
below 50 years, hence the derivative traders between 40 50 years comprises 8% and 50 and
above are nil. The given below table shows the age group of derivative traders and number
of respondents and their proportion in the total sample size in the respective age group
category :
37
PERCENTAGE OF
SR. NO.
AGE
NO OF RESPONDENT
RESPONDEND
ACCORDING TO AGE
24
48%
30 40 Years
22
44%
40 50 Years
8%
50 and Above
0%
TOTAL
50
100%
The above table showed in the below bar diagram which depicts the number of respondents
in the different age group categories:
38
The survey conducted by me include the age of derivative traders lie between Less than 30
years and 40 50 years. Out of total 50 sample, there are 24, 22 and 4 derivative traders
come under age group of less than 30 years, 30 40 years and 40 50 years respectively.
3.1.2 OCCUPATION :
The main occupation of derivative traders are classified under 4 categories Salaried,
Business, Student and professionals. Salaried comprises those who are working people and
their part of surplus savings are invested in derivative markets for speculation. Businessmen
are those whose surplus funds are transferred to derivatives markets to gain profit instead of
keep money idle in the business. Students who earns part time income or their savings are
investing in derivative markets to gain practical knowledge and exposure of the derivative
markets.professional are those who belongs to or engage in one of the profession.
SR. NO.
OCCUPATION
NO OF
RESPONDENT
PERCENTAGE OF
RESPONDENT ACCORDING
TO OCCUPATION
Salaried
15
30%
Business
28
56%
04
8%
student
03
6%
TOTAL
50
100%
3.
4.
professionals
39
From the Figure 1.2, it is clear that, out of total sample size of 50, the highest number of
respondents profession / occupation of the derivative traders i.e. Business include 28, next
second highest include salaried and followed by professionals i.e.15 & 4 respectively. and the
student who makes investment in derivative market are only 3.
PERCENTAGE OF
SR.
INCOME LEVEL
NO OF RESPONDENT
NO.
RESPONDENT ACCORDING
TO INCOME LEVEL
12%
1 Lakh to 2 Lakhs
21
42%
2 Lakhs to 3 Lakhs
18
36%
40
Above 3 Lakhs
10%
TOTAL
50
100%
41
the income level of 2 lakhs to 3 lakhs is 36%comprises 18 respondents, while the proportion
of respondents comes under income level of Above 3 lakhs is 10% comprises 5 respondents.
PERCENTAGE OF
DERIVATIVE TRADING(out of
NO. OF
total investment)
RESPONDENT
10% - 25%
42
25% - 50%
10%
50% - 75%
6%
75% - 100%
0%
TOTAL
50
100%
SR. NO.
RESPONDENT ACCORDING
TO SUCCESS RATIO
84%
42
From the above table, most of the investors are fails while incorporating their derivative
trading. There are 0% of investors fall under 75% - 100% where as 84% the highest one are
making 10%-25% of their income in derivatives.
From the above diagram, there are 42 derivative traders out of total 50 are fall under 10% 25% investment ratio category, 5 and 3 are come under 25% - 50% and 50 & 75%
respectively. no investors out of the total 50 are fall under 75% - 100% category.
PERCENTAGE OF RESPONDENT
SR.
INVESTMENT TIME
NO OF
NO.
HORIZON
RESPONDENT
1 Month
25
50%
2 Months
19
38%
3 Months
12%
TOTAL
50
100%
ACCORDING TO INVESTMENT
TIME HORIZON
44
45
From the figure 1.5, most of the directive traders are likely to invest for 1 months and it
indicate that they are very short term investors. The highest proportion of time horizon is 1
month and comprises about 50% i.e. 25 respondents are investing in derivative markets for 1
months only. 9 respondents i.e. derivative traders are investing in derivative markets for 2
months while there are very few derivative traders who trade for 3 months i.e. only 6 out of
the total sample size of 50 respondents. From the survey, it is clear that most of the derivative
traders who investing in the derivative markets are very short term (1 months) in nature and
very few traders are investing for 3 months.
The motives and objectives of derivative traders are classified into 4 categories Hedging,
Speculation, Arbitrage and Alternative Investment. In derivative markets, there are 3
participants Hedger, Speculators and Arbitrage. The above table 1.6 indicate total number
of derivative traders according to their primary motive :
PERCENTAGE OF
SR.
NO.
PRIMARY MOTIVE
NO. OF
RESPONDENT
RESPONDENT
ACCORDING TO
PRIMARY MOTIVE
Hedging
10
20%
Speculation
22
44%
Arbitrage
6%
Alternative Investment
15
30%
TOTAL
50
100%
46
47
.Hedgers face risk associated with the price of an asset. They use futures or options markets
to reduce or eliminate this risk. 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
are in business to take advantage of a discrepancy between prices in two different markets..
Some investors are looking derivative market as an alternative investment opportunity rather
than hedging, speculating and arbitrage.
SR. NO.
INVESTMENT
NO. OF
RESPONDENT
PERCENTAGE OF
RESPONDENT ACCORDING
TO INVESTMENT
Index Futures
17
34%
Stock Futures
12
24%
48
Index Options
15
30%
Stock Options
12%
TOTAL
50
100%
49
respectively. Some investors are investing in stock futures and stock options and their
proportion are 24% and 12 % respectively.
SR. NO.
NO. OF
DERIVATIVE STRATEGIES
RESPONDENT
PERCENTAGE OF
RESPONDENT ACCORDING
TO AWARENESS
05
10%
Covered Call
0%
Naked Put
0%
0%
TOTAL
05
10%
50
Straddle involves a call and a put option with the same strike / exercise price and the same
expiration date. A straddle buyer buys a call and a put option and the seller sell a call and a
put option at the same exercise price and the same expiration date. The maximum loss
associated with a long straddle position is the cost of the two options (premium paid for
buying the options). Profit potential is unlimited when the prices of the underlying asset rise
significantly and limited when they fall significantly.
Strangle is a combination of a call and a put with the same exipiration date and different
strike prices. If the strick prices of the call and the put options are X 1 and X2, then a strangle
is chosen in such a way that X1 > X2.
51
Most of the derivative traders are fail to incorporate trading successfully. The reasons could
be broker inefficiency, lack of information, delay in processing / ordering and any other.
The below table shows number of respondent and their proportion along with the reasons
which are responsible for the failure for derivaive trading incorporation in portfolio
management.
SR. NO.
DERIVATIVE TRADING
NO. OF RESPONDENT
% of RESPONDENT
Broker Inefficiency
10%
Lack of Information
35
70%
Delay in Processing/ordering
18%
Any Other
2%
TOTAL
50
100%
52
53
respondents were failure due to lack of information, 18% failure due to dealy in processing /
odering, 10% for broker inefficiency and 2% for other reasons.
PERCENTAGE OF
SR. NO.
KEY PARAMETER
NO. OF RESPONDENT
RESPONDENT ACCORDING
TO KEY PARAMETER
Risks
11
22%
Returns
31
62%
54
Time Horizon
6%
Liquidity
10%
TOTAL
50
100%
From the above figure, 31 respondents key parameter is Return, 11 respondents key
parameter is risk and 3 and 5 respondents key parameters are time horizon and liquidity.
55
Risk refers to the variability of expected return. It is an attempt to quantify the probability of
the actual return being different from the expected return. While
Return indicated the cash flow generated from the investment over the period of time. Time
horizon is the period for which investment is made. Time horizon may be short term, medium
term and long term. Liquidity refers to the requirement of funds and convertability of
securities into cash in short period of time.
SR. NO.
NO. OF
BASIS
RESPONDENT
PERCENTAGE OF
RESPONDENT ACCORDING
TO BASIS
Experience
24%
Outside Information
14
28%
Market Expectation
15
30%
16
18%
TOTAL
50
100%
56
From the above table, out of total 50 respondents, 15 respondents made on the basis of
market expecctation. 14 respondents are based on outside information and 12 and 9
respondents are made investment based on the experience and broker/friends tips.
57
investors react to the situation. 24% and 18% traders are invest based on their experience
and brokers/friends tips.
SR. NO.
NO. OF
EXPERIENCE
RESPONDENT
PERCENTAGE OF
RESPONDENT ACCORDING
TO EXPERIENCE
Very Good
0%
Good
8%
Average
22
44%
Bad / Poor
24
48%
TOTAL
50
100%
58
From the above table, 0 respondent experience is very good out of total 50 respondents. There
are 4 respondents whose experience is good in derivative markets. 22respondents experience
is average and 24 respondents faced bad / poor experience in the derivative markets.
59
Hypothesis Test using Chi-Square between Income Level and Investment Motive
(Null Hypothesis)
Ho :
(Alternative
Hypothesis) H1 :
Income Level
Less than 1 lakh
1 Lakh to 2 Lakhs
2 Lakhs to 3 Lakhs
Above 3 Lakhs
Total
H = S = A =AI
L RI S TS
Hedging
(H)
INVESTMENT MOTIVES
Speculation Arbitrage
Alternative
(S)
(A)
Investment (AI)
0
9
1
0
10
(Row Total
1.2
4.2
3.6
1
2
7
12
1
22
1
0
1
1
3
3
5
4
3
15
60
Total
6
21
18
5
50
*fo
0
2
1
3
9
7
0
5
1
12
1
4
0
1
1
3
fo-fe
(fo-fe)2
-1.2
1.44
-0.64
0.4096
0.64
0.4096
1.2
1.44
4.8
23.04
-2.24
5.0176
-1.26
1.5876
-1.3
1.69
-2.6
6.76
4.08
16.646
-0.08
0.0064
-1.4
1.96
-1
1
-1.2
1.44
0.7
0.49
1.5
2.25
Chi-Square (X2)=
**fe
1.2
2.64
0.36
1.8
4.2
9.24
1.26
6.3
3.6
7.92
1.08
5.4
1
2.2
0.3
1.5
(fo-fe)2/fe
1.2
0.155
1.155
0.8
5.485
0.543
1.26
0.268
1.877
2.101
0.01
0.362
1
0.654
1.633
1.5
19.003
Degree of Freedom =
9
(R 1) x (C -1) i.e. (4-1) x (4-1) = 9
Significance Level =
10%
Chi-Square Statistics =
14.684
61
CONCLUSION
63
SUGGESTIONS:
brokers
training,
providing
64
more
QUESTIONNAIRE
I, Manisha P. Rathi
__________________________________________________
___
__________________________________________________
__________________________________________________
_________________________
Contact No. : ________________________
1. Age _____________
2. Income Level
a) Less than 1 lakh
b) 1 lakh 2 Lakhs
3 Lakhs
d) Above 3 Lakhs
65
c) 2 Lakhs
3. Occupation
a) Service
b) Business
c) Student
d) Professionals _____________________
4.
Derivatives Market?
a) Less than 25%
b) 25% - 50%
c) 51% - 75%
d)
Above 75%
5. How frequently do you are trading in derivatives market?
a) 1 Month
b) 2 Months
c) 3 Months
b) Speculation
c)
Arbitrage
d) Alternative Investment
e)
High
Return
7.
b) Stock Futures
c) Index Options
d) Stock Options
8.
derivative trader?
a) bullish strategies
d) covered call
b) Bearish strategies
e) Naked put
f)straddle
66
strategies
9.
g) strangle
b)
Lack
of
Information
c) Delay in Processing /Ordering
________
67
d)
Any
Other
b) Return
c) Time Horizon
d) Liquidity
b) outside information
c) market expectation
b) Good
c) Average
d) Bad / Poor.
BIBLIOGRAPHY :
1.
2.
3.
www.iimcal.ac.incommunityFinClubdhandhan1art16-idm.pdf
4.
http://business.mapsofindia.com/investmentindustry/derivatives.html
5.
http://en.wikipedia.org/wiki/Derivative_(finance)
6.
http://www.completeoptions.com/optionspreads.htm
7.
http://www.optionseducation.org/basics/options_pricing.jsp#s
trike
8.
http://www.completeoptions.com/3keystosuccess.htm
9.
http://www.completeoptions.com/coveredcalls.htm
10.
http://www.completeoptions.com/PutOptions.htm
GLOSSARY
1.
2.
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.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
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.
13.
Spot Price: The price at which an asset trades in the spot market.
14.
15.