derivative in india final

DERIVATIVE IN INDIA1Professional Training Academy

2Professional Training AcademyWhy Derivatives in India

Origin3Professional Training Academy

4Professional Training AcademyDerivatives Trading on Exchanges

Business Growth of F&O Segment in India

5Professional Training Academy

Types of Market6Professional Training Academy

Spot Market Assets Class Delivery Equity Shares Commodity Physical Currency Physical


Derivative Market8Professional Training Academy

Forwards 9Professional Training Academy

Participants in Forward Contract

Buyer (Who takes a long position)Seller (Who takes a short position )10Professional Training Academy

Future 11Professional Training Academy

Participants in Futures Contract

Future Buyer Future Seller

Clearing Corporation 12Professional Training Academy

Positions in a Futures Contract13Professional Training Academy

Difference Between Future & Forward Forward Future Nature of ContractsCustomized Standardized Counterparty Any Party Clearing Corporation Credit RiskExist No RiskLiquidity Very Low Very High Margins Not Required Received / Paid on Daily Basis Valuation Not DoneDaily BasisDelivery Physical / Cash No Delivery


Options 15Professional Training Academy

16Professional Training AcademyTypes of Options

Right to Buy

Call Options


Right to Sell

Put Options


19Professional Training AcademyFactors impacting Option Prices

Derivative Terminology20Professional Training Academy

Contact SpecificationS. noTerminologyRemarkIndex Future(Nifty)Index Option (Nifty)1Lot SizeMinimum Quantity traded in a lot decided by the exchanges50502Spot PricePrice prevailing in delivery market550055003Future/Strike PricePrice Prevailing in future market/price for which call or put option exercise 555055504Option PremiumAmount decided by the exchange on the basis of strike price and spot price1005Expiry DateLast Thursday of a month Last ThursdayLast Thursday6Contract Next Three Month Feb, March, AprilFeb, March, April


Contact Specification

S. noTerminologyRemarkIndex Future(Nifty)Index Option (Nifty)7 Initial Margin Minimum amount required to make position (Suppose 25% of contract Size)Rs 69,375(25% of 2,77,500)Option Premium * Lot SizeRs 5,000(100*50)

8Closing Price Closing Price at the end of day 55009Mark to MarketMarginDifference between Trade price & closing Price (Daily Settled )MTM=(Trade price closing price)* Lot Size Pay Rs 2,500

(5550-5500)*50No MTM as we pay whole amount Our Expectation is that index rise


Participant 23Professional Training Academy

24Professional Training AcademyPlay Grounds


www.nseindia.comwww.bseindia.com

26Professional Training AcademyImportant Website

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ParticularsIncome /Loss from Derivatives

Head

Income from Business & Profession

TaxedAccording to the tax slabLoss from DerivativesAdjusted under all Five Head Profit & Carry Forward to Next Year

29Professional Training AcademyTaxation

Sr.TaxesRates FuturesOptionsBuy 1 Lot of Nifty at 6000 ,Contract Size ( 50shares* 6000) / Buy 6000 call option at 60 Rs premium(50shares*60)3,00,0003,0001Brokerage0.03 % On Contract Size/2.5% on Option Premium (Both Side)90 Rs (0.03% on 3,00,000)75 Rs (2.5% on 3,000)2Service Tax10.36% on Brokerage Amount(Both Side) 9.32 (10.36% on 90 Rs) 7.77(10.36% on 75 Rs)3Securities Transaction Tax(STT)0.017% on Contract Size (Only on Selling Side)25.50(0.0085% on 3,00,000 Rs)2.55(0.0085% on 3000Rs)4Stamp Duty0.004% on Contract Size(Both Side)12(0.004% on 3,00,000 Rs)1.2(0.004% *3,000Rs)

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Education Cess2% on Tax Amount0.93(2% on 9.32+25.50+12)0.23(2% * 7.77+2.55 +1.2)

6Higher Edu Cess1% on Education Cess0.014 (1% on 0.93)0.0028 (1% on 0.23)Total Cost137.7686.75

30Professional Training AcademyCost of Trading in Derivative

How does One Make Money in A Futures Contract?Trade according to the trendsComplete knowledge of DerivativesDiscipline ApproachKeep Stop loss on every trade


Professional Training Academy32Thank You