A Knowledge

based move, to
create wealth.

(For internal circulation only)

S&P CNX NIFTY (Weekly Chart)

Can you please reply ???

What to do ?
Why are we loosing ?
Is the market certain ?
Can we catch the Top and Bottom at right time ?
Is there any insurance policy which can hedge the market risk ??
Not taking risk is the biggest risk..

DERIVATIVE
DERIVATIVE
S
S

Derivatives
Derivatives is a product whose value is derived from the value
of underlying assets.
(Underlying asset can be an Equity, Commodity, Currency,
Interest rate, exchange rate, etc.)
Example : - Derivative of Reliance derives its value from the
cash market price
(If cash price of Reliance moves up then underlying also moves
in the same manner.)
Option price also moves up or down by the movement of
underlying price.

Equity derivatives
Available products in NFO (NSE future & Option) segment.
Index Future
Index Option
Stock Future
Stock Option
Index Future : Nifty, Banknifty, CNXIT, Mininifty, DJIA, S&P 500,
CNXPSE, CNXINFRA and Midcap50 (9 Indices)
Index Option : Calls and Puts of Nifty (5000 strike Call, 5100 strike
Call, 5000 strike Put) Interval by 100 points
Calls and Puts of Banknifty (9500 strike calls, 9000 strike puts)
Stock Future : 220 stocks including Nifty 50 and others
Stock Option : Out of 220 Stock future, around 100 stocks are liquid in
option trading.

Derivatives Market volumes & Open Interest

Index future & option is contributing around 75-80% market
volumes of NSE F&O segment and the growing rapidly.
Index Options are contributing around 65-70%.
Stock future contributes 15%
Stock option contributes 4-5% of total daily trading volumes
Market wide Derivatives Gross Open Interest is 1,55,000 Cr.
Out of which 60% is part of Index option (Nifty Calls &
Puts)

Why to talk about Derivatives

Risk Control : An investor can use derivatives to control risk as his

risk profile dictates.

High Leverage : Derivative contracts enables the investor to take an

exposure to the full value of underlying shares for a fraction of its
value in the form of margin.

High Liquidity : Derivative contracts offers very high liquidity

compared to cash market.

Hedging : Hedge against any unforeseen event and leverage.

Difference between Cash trading and

Derivatives trading
Cash Trading : Investment, in expectation of short term gains.
Derivatives Trading : Hedging, Arbitrage, short term price movement.
In cash segment you can buy any number of stocks by paying the entire
value. If you buy in cash you will get the dividend, bonus, voting rights.
In Derivatives, if you buying a future contract means you are not actually
buying, you are just entering in a contract to buy that underlying. You
dont get bonus, dividend any other thing expect price movement.
Short selling can be done and carried over night in derivatives
segment.

How is Futures trading conducted?

Future contract of Reliance is trading at 830/You can buy 1, 2, 5, 7, 10, 50 end number of stocks in cash
segment.
In future which is standardized contract can be trade by lot
values.
Lot size of Reliance Ind 250
CMP : 830
Value : 2,07,500
Investment : (Only margin money = 20% around 40,000)

(Future is a leverage product, here you have to pay the margin money
only.)

How is Futures trading conducted?

If stock moves up by 5% and comes to 870
Your gain : 870 830 = 40
40 rs per share * 250 (Lot size)
Profit = 10,000
If goes down by 5% and comes to 790
Your loss : 790 830 = 40
40 rs per share * 250 (Lot size
Loss = 10,000
Your ROI
Compare with cash.. Which is better??

How is Futures trading conducted?

A possible outcome
Pay off of Future trades. Risk : Unlimited, Reward : Unlimited

Options
Options are derivative contracts where the Buyer of
Option gets a right (but not Obligation) to buy or sell a
specified quantity of the underlying asset at an agreed
price (strike price) on or before the specified future date
(expiration date).
Options is a tool to limit our risks & maximize our
returns

OPTION SIMPLIFIED
Options.. where you have several alternative options..

Index Options contribute around 70% market volumes

Option trading is the only way to get the benefit of range bound market
movement.
Option trading is the easiest way to grip the market share with limited
risk and unlimited reward trade
A focused and serious Option learning may help you to serve our
existing clients in a better way and an approach to add many more to
provide our expertise services

Why to talk about Options

Leverage : Pay only premium of strike to get the benefit of
price movement.

Better ROI : In options, trading cost basis is so low, hence

our
percentage returns can be so greater as compare to
future or
cash trading.

Trade for income : We can design few strategies specifically

for
generating income on a regular basis.

Profit from declining prices : By buying put or spread

Profit in range bound market movement :

Profit from volatility :

Reduce or eliminate risk : An investor or trader can use

options to control risk as his risk profile dictates.

Types of Options
Call Options :
A call option gives the holder (option buyer), the right to buy a
specified quantity of the underlying asset at a strike price on or
before expiry date.

Put Options :
A Put Option gives the holder (i.e. the buyer), the right to sell a
specified quantity of the underlying asset at a strike price on or
before expiry date.

Option Buyer V/s Seller

Option Buyer
Pays premium
Has right to exercise resulting in a long position in the
underlying
Time Decay works against buyer
Risk limited, Reward unlimited
Option Seller
Collects premium
Has obligation if assigned, resulting in a short position in
the underlying
Time Decay works in favor of seller
Risk unlimited, Reward limited

Strike Prices
In-the-money
Option with intrinsic value
At-the-money
Exercise Price = Market Price
Out-of-the-money
No intrinsic value
Only time value

Difference between future and Options

In case of futures, both the parties have an obligation to buy/sell
the underlying asset. Whereas in the case of options the buyer
enjoys the right and not the obligation, to buy or sell the
underlying asset.
In case of Futures the risk/return profile of both buyers and sellers
is equal whereas in case of options the buyer has a limited risk and
unlimited gain potential and seller of the option has a unlimited
risk and limited gain potential
Future prices are mainly affected by the prices of underlying asset
while option prices are affected by not only the prices of
underlying asset, but also by volatility and time to expiry

Pricing of Options
Options price = Intrinsic value + Time value
XYZ ltd is trading at 100 rs. (someone is giving me right that you can
buy the stock at 100, today or any time before the expiry).
For giving me this right he will charge something.
Suppose i have taken this right by paying 2 rs, now my cost is 102. If
XYZ ltd comes to 90, I am not going to use this right, let the 2 rs go. If
price moves to 110, surely I will go and ask for my right to buy the
same at 100 rs.
Now if XYZ ltd moves to 110 rs.
Value of my right which I have taken at 2 rs, now will move to be
around 12 rs. (10 rs is intrinsic value + 2 rs. Time value)

Options Trading
There are three types of market participants
1.Speculators
2.Hedgers
3.Arbitragers
Option can be traded by all of them but price movement,
payoff, risk reward, execution, entry and exit time differ
from future trading as per the nature of traded option or
strategy.
Option can be traded naked (single strike) or by combining
two or more strikes

Options Trading
Take a learning from future for option trading
If a person has a positive or negative view for a particular
time horizon (like intra day, 2-3 sessions, one week, till
expiry, etc.) on Nifty future, he can simply trade according
to that.
If he buys one lot of Nifty future :
Profit If price moves up (Unlimited)
Loss If price moves down (Unlimited)
No profit No loss If price remains at that levels
He can buy a Call option in spite of buying a lot of future
(Profit Unlimited Loss- Limited to the premium paid)

Options Trading

(How the options premium moves with the movement of future price)

Future /Option Trading

Future Trade

1 Day

2 Day

3 Day 4 Day

On
Expiry

Buy 1 lot Nifty

Future @ 5200

5250

5300

5150

5200

5350

Profit/Loss

50

100

-50

150

Buy 1 lot Nifty

5200 strike Call @
100

123
(Excluding
time
decay)

145

65

88

150

Profit/Loss

23

45

-35

-12

50

Option Trade

(Assume Nifty future is trading @ 5200 and 5200 Call is trading @ 100/-)

Cash/Future/Option Trading
A stock has given upside breakout above 1000 levels, now if it
holds 1010 then may test 1100 levels. But if it fails to hold 1000 then
may test 900 levels.

---------------------------------------------------------------------------Buy Cash : Buy 250 shares @ 1000/Investment : 2,50,000/If it moves to 1100 then profit = 25000 Return on Investment : 10%
If it goes to 900 then risk = 25000
Risk on Investment : -10%
Buy option : Buy 1000 Call @
----------------------------------------------------------------------------------------------------------25/------Investment = 6,250
Buy Future : Buy 1 lot of 250 shares
Maximum Risk : 6,250/Margin = 20% of total value = 50,000
If it moves to 1100 then profit =
If it moves to 1100 then profit = 25,000
18,750
ROI = 50%
ROI = 300%
If it goes to 900 then risk = 25,000
If it goes down to 900 then risk =
ROI = -50%
6,250/ROI = -100% (ROI is three times)

A systematic way for Option trading

Option Trading Strategies

Strategies to be used when Market view

Bullish

Long Future
Long Call
Short Put
Bull Call Spread
Bull Put Spread
Covered Call
Put Hedge

Strategies to be used when view is

Bearish

Short Future
Long Put
Short Call
Bear Put Spread
Bear Call Spread
Call Hedge
Covered Put

Strategies to be used when view is

Range Bound

Short Straddle
Short Strangle
Long Butterfly
Short Strip
Short Strap
Long Condor

Strategies to be used when Market is

Volatile

Long Straddle
Long Strangle
Short Butterfly
Long Strip
Long Strap
Short Condor

Trading Strategies

BUY CALL :- Buy Nifty 5200 Call @ 50 Rs.

NIFTY FUT :- 5100 | BUY 5200 CALL @ 50 | Lot Size = 50

BEP :- 5200 + 50 = 5250 | RISK :- - 50*50 = - 2500 | REWARD = UNLIMITED

BUY CALL :- Buy Nifty 5200 Call @ 50

NIFTY FUT :- 5100 | BUY 5200 CALL @ 50 | Lot Size = 50
BEP :- 5200 + 50 = 5250 | RISK :- -50*50 = - 2500 | REWARD = UNLIMITED

Market Expectation : Bullish

Example :- If Nifty goes up to 5500
His gain = 5500-5200-50 = 250
Net Profit = 250 * 50 = 12500
------------------------------------------------If Nifty goes down to 5000 or 4800
Buyer will not exercise his right :
His Loss = Premium he has paid Rs 50/- only
Net Loss = -50 * 50 = -2500

SELL CALL :- Sell Nifty 5200 Call @ 50

NIFTY FUT :- 5100 | SELL 5200 CALL @ 50 | Lot Size = 50

BEP :- 5200 + 50 = 5250 | RISK :- UNLIMITED | REWARD = 500 * 50 = 2500

SELL CALL :- Sell Nifty 5200 Call @ 50

NIFTY FUT :- 5100 | SELL 5200 CALL @ 50| Lot Size = 50
BEP :- 5200 + 50 = 5250| RISK :- UNLIMITED | REWARD = 50 * 50 = 2500

Market Expectation : Bearish

Example :- If Nifty goes down to 5100
His gain = Only Premium Received
Net Profit = 50 * 50 = 2500 to (Limited)
------------------------------------------------If Nifty goes up to 5500
His Loss = 5200 5500 +50 = - 250
Net Loss = - 250 * 50 = - 12500 to
(Unlimited)

BUY PUT :- Buy NIFTY 5000 Put @ 60

NIFTY FUT :- 5100 | BUY 5000 PUT @ 60 | Lot Size = 50

BEP :- 5000-60 = 4940| RISK :- -60 * 50 = - 3000 | REWARD = UNLIMITED

BUY PUT :- Buy NIFTY 5000 Put @ 60

NIFTY FUT :- 5100 | BUY 5000 PUT @ 60 | Lot Size = 50
BEP :- 5000-60 = 4940| RISK :- -60 * 50 = - 3000 | REWARD = UNLIMITED

Market Expectation : Bearish

Example :- If NIFTY goes down to 4800
His gain = 5000-4800-60 = 140
Net Profit = 50 * 140 = 7000
------------------------------------------------If NIFTY goes up to 5200
Buyer will not exercise his right :
His Loss = Premium he has paid Rs 60/only
Net Loss = 50 * - 60 = - 3000

SELL PUT :- SELL NIFTY 5000 Put @ 60

NIFTY FUT :- 5100 | SELL 5000 PUT @ 60 | Lot Size = 50

BEP :- 5000-60 = 4940 | RISK :- UNLIMITED | REWARD = 60 * 50 = 3000 LIMITED

SELL PUT :- SELL NIFTY 5000 Put @ 60

NIFTY FUT :- 5100 | SELL 5000 PUT @ 60 | Lot Size = 50
BEP :- 5000-60 = 4960 | RISK :- UNLIMITED | REWARD = 50 * 60 = 3000 LIMITED

Market Expectation : Bullish

Example :- If NIFTY goes up to 5200
His gain = Only Premium Paid
Net Profit = 50 * 60= 3000
------------------------------------------------If NIFTY goes down to 4700
His Loss = Unlimited in falling market
4700 5000 + 60 = - 240
Net Loss = 50 * - 240 = - 12000 to
unlimited

PUT HEDGE
WHEN
Put hedge is used when we are bullish on some stock.
And want to hedge our position if the prices move
downwards.

HOW
In this strategy we first buy a future and then hedge our
position by buying a put immediately.

PUT HEDGE
PROBLEMS
Which strike price.
What time.
Premium value.

Reversal of positions
If any important support level is breached
(a) We can reduce losses by squaring off the
position.
(b) Squaring off the future an persisting with the
put.

NIFTY Put Hedge

Buy Future @ 5100 and buy 5100 PA @ 100

Nifty FUT :- 5100 | BUY Nifty FUT @ 5100; BUY 5100 PUT @ 100 | Lot Size =
50
BEP :- 5100+100 = 5200 | RISK :- 50 * -100 = - 5000 | REWARD =
UNLIMITED

Nifty Put Hedge

Nifty FUT :- 5100 | BUY Nifty FUT @ 5100; BUY 5100 PUT @ 100 | Lot Size =
50
BEP :- 5100 + 100 = 5200 | RISK :- 50 * - 100 = - 5000 | REWARD =
UNLIMITED Market Expectation : Bullish
Example :- If Nifty goes up to 5400
FUT Gain 5400-5100 =300, Option Loss = - 100
His gain = 300-100 = 200
Net Profit = 50 * 200 = 10000 to unlimited
------------------------------------------------If Nifty goes down to 4800
FUT loss 4800-5100 = - 300, Opt Profit 51004800-100 = 200
His Loss = - 300 + 200 = -100
Net Loss = 50 * -100 = - 5000 limited

CALL HEDGE
WHEN
Call hedge is used when we are bearish on some stock.
And want to hedge our position if the prices move up.

HOW
In this strategy we first sell a future and then hedge our
position by buying a call immediately.

CALL HEDGE
PROBLEMS
Which strike price.
What time.
Premium value.

Reversal of positions
If any important resistance level is breached
(a) We can reduce losses by squaring off the
position.
(b) Squaring off the future an persisting with the
call.

Nifty Call Hedge

Sell Future @ 5100 Buy 5100 CA @ 100

Nifty FUT :- 5100 | SELL Nifty FUT @ 5100; BUY 5100 CALL @ 100 | Lot Size = 50
BEP :- 5100 - 100 = 5000 | RISK :- 50 * - 100 = - 5000 | REWARD = UNLIMITED

Nifty Call Hedge

Nifty FUT :- 5100 | SELL Nifty FUT @ 5100 ; BUY 5100 CALL @ 100 | Lot Size = 50
BEP :- 5100 - 100 = 5000 | RISK :- 50 * - 100 = - 5000 | REWARD = UNLIMITED
Market Expectation : Bearish
Example :- If Nifty goes down to 4900
FUT Gain 5100-4900 =200, Option Loss = - 100
His gain = 200- 100 = 100
Net Profit = 50 * 100 = 5000 to unlimited
------------------------------------------------If it goes up to 5500
FUT loss 5100- 5500= -400, Opt Profit 55005100-100= 300
His Loss = - 400+ 300 = - 100
Net Loss = 50 * -100 = - 5000 limited

COVERED CALL
WHEN
This strategy is used when we are bullish on a
stock.
And want to reduce the cost of the future but it limits
the profit to the strike price of the call.

HOW
In this strategy we first buy a future and sell a call of
strike price higher than the future price.

Nifty Covered Call

Nifty FUT :- 5100 | BUY Nifty FUT @ 5100 ; Sell 5300 CALL @ 20 | Lot Size = 50
BEP :- 5100 20 = 5080 | RISK :- Unlimited | REWARD = 50 * 220 = 11000
LIMITED
Market Expectation : Bullish
Example :- If it goes up to 5300
FUT Gain 5300-5100=200 + Option gain of 20Rs.
Total gain = 220 * 50 = 11000

------------------------------------------------If goes down to 4800

FUT loss 4800-5100 = - 300, Opt Profit = 20
His Loss = - 300 + 20 = - -280
Net Loss = 50 * - 280 = - 14000 to unlimited

Option Spreads
Buying a call (put) and selling a call (put) with
different strike prices but the same expiration
month.
Two types of spreads
Bull Spreads
Bear Spreads

Bull Call Spreads

Maximum loss occurs below lower strike

price
Maximum profit occurs above upper strike
price
Breakeven level equals:
Lower strike plus Premium

Nifty Bull Call Spread

Buy 5100 CA @ 100 Sell 5300 CA @ 20, Net Premium 100 + 20= - 80 (Lot Size
= 50)

Market Expectation : Bullish

If it goes up to 5300:

If it Down to 5000 :

Profit on 5100 CA = 5300-5100-100=100

Loss on 5100 CA = -100

Profit/Loss on 5300 CA = 20

Profit on 5300 CA = 20

His Gain = 100 + 20

His Loss = - 100 + 20

Net Gain = 50 * 120 = 6000

Net Gain = 50 * -80 = - 4000

Bear Put Spreads

Maximum loss occurs above upper strike price
Maximum profit occurs below lower strike price
Breakeven level equals:
Upper strike minus Premium

Nifty Bear PUT Spread

Buy 5100 PUT @ 100 Sell 4900 PUT @ 30, Net Premium 100 + 30 = -70 (Lot
Size = 50)

Market Expectation : Bearish

If it goes down to 4900:

If it goes up to 5200:

Profit on 5100 PUT = 5100-4900-100 =

100

Loss on 5100 PUT = - 100

Profit on 5300 PUT = 30

His Gain = 100 + 30
Net Gain = 50 * 130 = 6500

Profit on 4900 PUT = 30

His Loss = - 70
Net Gain = 50 * -70 = - 3500

Long Collar
Long Collar : Combination of Put hedge and Covered call
Buying a future
Buying an at the money put to protect from downside risk
Sell an slightly out of the money call to reduce the cost of
hedging, usually a level where we feel that stock or index
may take hurdle.
Buy a Future
Buy an at the money Put
Sell an Out of the money call
Buy Nifty future @ 5100
Buy 5100 put @ 100
Sell 5300 call @ 20

Long Collar
Buy Nifty future @ 5100
Buy 5100 put @ 100
Sell 5300 call @ 20

Net Premium Paid

100-20 = 80
Break Even
5100 + 80 = 5180
Risk = -80 * 50 = 4000
Reward = Maximum
reward at 5300
200-100+20 = 120
6000/-

Option Straddles
Long Straddle:
Consist of buying a put and buying a call (Long Straddle).
Both legs have the same strike price and same expiration
View large movement on either side

And
Short Straddle:
Consist of selling a put and selling a call (Short Straddle).
Both legs have the same strike price and same expiration.
Very Narrow range bound movement

Long Straddles

Maximum loss is equal to net debit, or total premium paid

Maximum profit is unlimited

Two Breakeven levels are equal to:

common strike price plus and minus total premium paid
Eg Buy NIFTY 5500 CA @ 117 and Buy 5500 PA @ 113

Net Premium Paid

- 117 - 113 = - 230
Break Even Upside
5500 + 230 = 5730
Break Even Downside
5500 230 = 5270
Risk = -230 * 50 = 11500
Reward = Unlimited
above 5730 and below
5270

Short Straddles

Maximum profit is equal to total premium received

Maximum loss is unlimited

Two Breakeven levels are equal to:

common strike price plus and minus total premium
received
Eg Sell NIFTY 5500 CA @ 117 and Sell 5500 PA @Net
113
Premium Received

117 + 113 = 230

Break Even Upside
5500 + 230 = 5730
Break Even Downside
5500 230 = 5270
Risk = Unlimited above
5730 and below 5270
Reward = 50 *230 =
11500

Option Butterfly
Long Butterfly:
It can be used to generate extra income when the investor
believes the market is stagnating but does not want
exposure to an unexpected rise or fall.
Buying one In the money Call/Put
Selling two at the money Call/Put
Buying one out of the money Call/Put
Buy 5300 strike Call @ 254
Sell two 5500 strike Call @ 110 * 2
Buy one 5700 strike Call @ 30

Long Butterfly
Buy 5300 strike Call @ 254, Sell two 5500 strike Call @ 110 * 2
Buy one 5700 strike Call @ 30

Net Premium Paid :

254-220+30 = 64
Break Even Upside :
5636
Break Even
Downside : 5364
Risk = If goes below
5364 or above 5636
levels (254+30-220 =
64)
Reward =
Maximum reward at
5500
(-54+220-30 = 136)

Option Butterfly
Short Butterfly:
It can be used to generate extra income when the investor
believes the market is highly volatile as it would move
sharply on either side.
Selling one In the money Call/Put
Buying two at the money Call/Put
Selling one out of the money Call/Put
Sell 5300 strike Call @ 254
Buy two 5500 strike Call @ 110 * 2
Sell one 5700 strike Call @ 30

Short Butterfly
Sell 5300 strike Call @ 254, Buy two 5500 strike Call @ 110 * 2
Sell one 5700 strike Call @ 30

Net Premium
Received: 254220+30 = 64
Break Even Upside :
5636
Break Even
Downside : 5364
Reward = If moves
below 5364 or above
5636 levels (254+30220 = 64)
Risk = Maximum risk
at 5500
(-54+220-30 = 136)

Butterfly (Short Call & Put)

Sell 5500 Call @ 165 & Sell 5500 Put @ 125
Buy 5300 strike Put @ 65
Buy 5700 Call @ 75
Net Premium
Received: 165 + 125
65 75 = 150
Break Even Upside :
5650
Break Even
Downside : 5350
Reward = Maximum
profit if Nifty remains
around 5500 levels =
150
Risk = 50 Rs. If it goes
below 5350 or above
5650

Option Calendar Spread

Short Butterfly:
It can be used to generate extra income in a neutral
market.
Income by profiting from time decay
Sell current month Call
Buy next month call of same strike price
Sell June 5500 strike Call @ 110
Buy July 5500 strike Call @ 165

Which strategy to use?

Identify the market : Direction, price target and time frame.
Strike : Avoid deep out of the money option until you are not
expecting sharp movement in that direction. Also avoid deep in the
money as it will charge more premium.
Strategy for short term option trader.
Beginning of series (Where option price is high)
Bullish : Bull Call Spread, Covered Call, Long Collar
Bearish : Bear put spread, Covered Put, Short Collar
Range Bound : Short straddle, Long butterfly
Near the expiry of current series (Where option price is very less)
Bullish : Buy call
Bearish : But Put
Direction not clear : Long straddle (Buy both Calls & Puts)/Strangle
23/11/2011 - (Nifty 4750, Bought Nifty 4700 Put @ 18 and Buy 4800 Call @ 18) went down till 4640
profit was 60-70 points)

Stock repair strategy

How to reduce cost ?
Consistent return from dull stock
Do you have these stocks in your portfolio and
dont want to sell, as already you are in huge
lose
IFCI, Suzlon, Chambalfert, IDFC, RCOM,
Powergrid, NTPC

Is there any way to get consistent

return?
CALL Writing/Selling of higher Strike Price

Option Chain

Option
Open Interest

Factors affecting option values

Current Price of the underlying asset (S)

Exercise Price of the option(K)
Interest Rates (Rf)
Time to Expiry (T)
Volatility of prices of the underlying asset (s)

Derivatives Reports
An easy way to get the market view
&
option strategy according to that scenario..

Daily Derivatives Strategist

Derivatives Strategist

Derivatives Outlook of Nifty, taking into

consideration the open interest positions & PCR
Important daily statistics
Market turnover and FII Activities in Derivative
Segment.
Securities in Ban Periods.
Nifty Future/Options Trading Guide.
Important Derivatives data Indicators (PCR, IV & HV)
Stock specific changes in open interest
Rollover Data for near month Expiry.
Periodicity: Daily Morning [on all working days]

Anand Rathi Securities Pvt Ltd

Weekly Derivatives Strategist

Weekly Report
(Derivatives)

Derivatives write-up on Nifty, along with top ten

stocks.

Periodicity: First working day of the week.

Strategy Note
Derivates desk gives various Derivatives Strategies
(one pager), which are as follows :

Buy Call/Puts
Covered Call/Covered Put
Put hedge/Call Hedge
Long/Short Straddles
Long/Short Strangle
Long/Short Butterfly
Long/Short Collar
Bull/Bear Put Spread
Bull/Bear ratio Spread
Other

Anand Rathi Securities Pvt Ltd

Pair Trade
PAIR STRATEGIES (From Derivative Desk)

Two stock from the same sector with high correlation

is found out based on
historical data and if any
divergence is found in price ratio, pair strategy is initiated.
(Current Ratio is more than 1 Standard Deviation from
Average ratio)
One stock is sold and other stock is bought adjusting
the quantity to the appropriate level so that the net
exposure is near zero.( Long Exposure Short Exposure ~
Zero)
Profits are booked when the Price ratio converge to
its Average Ratio

Periodicity: As and when Any idea clicks and gets

validated.

Directional Call
Get Set Go
(A Directional call from Derivative Desk)

A short term directional call where minimum

return would be 7-8%

Periodicity: As and when Any idea clicks

and gets validated.

Nifty Strategies

We are always happy to stay in touch

For your wealth creation
&
A better relationship...
Communication ways Exodus, Telephone, Cell Phone, e-mail,
Audio Conference, Video Conference, etc..

Questions

Thank You !!!