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 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 fluctuation in the underlying asset price in futures & options. The capital adequacy norms for banks in the European Economic Community demand less capital to hedge or speculate through derivatives than to carry underlying assets. Derivatives are weighed lightly than the assets that to carry underlying assets. Derivatives are weighed lightly than the assets that appear on bank balance sheets. The size of these off balance sheet assets, which include derivatives, is more than seven times as large as balance sheet items at some American banks causing concern to regulators.
[...] The derivatives trading should be done in a separate segment with separate membership; That is, all members of the cash market would not automatically become members of the derivatives market. The derivatives market should have a separate governing council which should not have representation of trading by clearing members beyond whatever percentage SEBI may prescribe after reviewing the working of the governance system of exchanges. The chairman of the governing council of the derivative division/ exchange should be member of the governing council. [...]
[...] Karvy's ability to mass customize and offer a diverse range of products for a diverse range of customers has helped mutual fund companies' position themselves in the market place. Vision: Karvy's aspiration of establishing itself as an integrated financial services company is propelled by a vision that is shared by its entire work force. Towards this end Karvy has dedicated itself to 1. Have a single-minded focus on investor servicing Established Karvy as household name for financial services Set industry standards Establish a leadership position in all chosen areas of business. [...]
[...] CHARTS OF WIPRO CALL OPTIONS CHARTS OF WIPRO PUT OPTIONS WIPRO PUT OPTIONS FROM TO Market Price Volume Premium Total Value WIPRO CALL OPTIONS FROM TO Market Price Volume Premium Total Value CHAPTER-IV CONCLUSIONS & RECOMMENDATIONS OBSERVATIONS At present scenario the derivatives market has increased to a great position. Approximate its daily turnover reaches to the equal state of cash market. The average daily turnover of the NSE in derivatives market is Rs.4,50,000 Lakhs Presently the available scripts in future and options segment are 118 scripts The derivatives market is newly started in India and it is not know by every people so SEBI should take action to create the awareness in the people about this derivatives market. [...]
[...] For example, if the price is Rs.700, we will make a profit of Rs.30 on selling price in cash market WIPRO and a loss of Rs.25 on buying stock WIPRO futures. The net profit is rs.5. On the other hand, if the price is Rs.650, we make a loss of Rs.20 on selling cash market WIPRO and a profit of Rs.25 on WIPRO futures. The net profit remains Rs.5. Our investment in this transaction will be Rs.250 on cash market WIPRO plus a margin of say 20% on WIPRO futures. [...]
[...] These in combination with other derivatives create a whole world of instruments to choose form depending on the kind of requirement and the kind of market expectations. Exotic options are often mistaken to be another kind of option. They are nothing but non-standard derivatives and are not a third type option. OPTIONS PRICING Prices of options are commonly depending upon six factors. Unlike futures which derives there prices primarily from prices the undertaking. Option's prices are far more complex. The table below helps understand the affect of each of these factors and gives a broad picture of option pricing keeping all other factors constant. [...]
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