smart disha derivative market seminar- 15 april 2017

Titl

e

Derivatives

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

SMART DISHA Seminar on Derivatives-

15 April 2017

Session Objective:

To understand the basic fundamentals of Derivatives

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Seminar on Derivatives- 15 April 2017

Definition: Derivatives are financial instruments whose value

depends on the value of other, more basic underlying assets. The underlying asset can be an Index, stock,

commodity, currency, etc.

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Crude Oil

Petrol

Diesel

Curd

Milk

Paneer

Kerosene Butter Milk

Underlying

Derivative

Real Life example of Derivatives

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Derivatives Derivatives

Futures Futures Options Options

Types of Derivatives

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

• Future Contract – A future contract is a standardized forward contract between two parties where one of the parties commits to sell and the other to buy a stipulated quantity of a security or an index at an agreed price on or before a given date in future.

Clearing

House

Clearing

House A (Buyer)

B (Seller)

What are Futures ?

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Comparison : Cash and Futures

Cash

•Full Payment •T + 2 Settlement

Futures

•Requires margin payments

•Follows daily settlement

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Basic concepts of Futures

Contract System instead

of Delivery system

Fixed Lot size

Expiry Dates

- This Month

- Next Month

- Far Month

Margin types

- Gross Margin

- Mark to

Market Margin

Futures

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Advantages of Futures

Portfolio without Hedging

Portfolio worth Rs. 6lacs

Market Corrects by 15%

Portfolio loss of = - Rs.90000

Portfolio without Hedging

Portfolio worth Rs. 6lacs

Market Corrects by 15%

Portfolio loss of = - Rs.90000

Portfolio after Hedging

Portfolio worth Rs. 6lacs &

Sells one lot of Nifty @

9000

Market Corrects by 15%

Approx Portfolio loss of

600000*15% = - Rs.90000

225000*15% = Rs. 33750

-Rs. 56250

Portfolio after Hedging

Portfolio worth Rs. 6lacs &

Sells one lot of Nifty @

9000

Market Corrects by 15%

Approx Portfolio loss of

600000*15% = - Rs.90000

225000*15% = Rs. 33750

-Rs. 56250

Hedging

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Benefits of Futures… Continued

Short

Position

Possible

Margin

Payment

Index

Trading

BTST/ST

BT

Possible

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

What are Options?

• A Contract that:

• Gives the buyers the right, but not the obligation;

• To buy or sell a specified underlying asset;

• At a set price;

• On or before a specified date.

Options

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Options

Type of Options

Call

Bullish

Put

Bearish

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Real Life example of Options

You want to buy house worth Rs.25lakhs

You pay Rs. 50k as a initial

amount (Valid for 2 months)

After 1 month you get an offer

of Rs.28lakh

You exercise your right

Total Profit of Rs. 2.5Laks.

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Profit is unlimited if price increases,

and loss is limited to the amt of premium

paid

Buying a call

option:

Selling a call option:

Profit limited to premium received,

loss is unlimited if price increases

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Buying a put option:

Profit unlimited if market falls,

loss limited to the amt of premium paid

Selling a put option:

Profit limited to premium received,

Loss unlimited if the market falls

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Options payoff

Market Trend Buy Sell Profit Loss

Bullish Call Unlimited Limited

Bullish Put Limited Unlimited

Bearish Put Unlimited Limited

Bearish Call Limited Unlimited

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

➢Sir Cash ke open position ke against Futures mein hedging kar sakte hain. ➢Aur Futures ke again option me bhi ➢Sath hi sath kam investment mein jyada maal bhi utha sakte ho ➢ Short term me high returns bhi milta hai ➢ Aur Options mein sirf premium pay karna padta hai

F & O – Product Pitching

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580

Thank You

www.smartdisha.com

info@smartdisha.com

LL-079-48007780

M- 7043690580