INTRODUCTION

1.1 A STUDY ON DERIVATIVES:

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The only stock exchanges operating in the 19 the century were those of Bombay set up in

1875 and Ahmedabad set up in 1894. These were organized as voluntary non-profit-making

association of brokers to regulate and protect their interests. Before the control on securities

trading became a central subject under the constitution in 1950, it was a state subject and the

Bombay securities contracts (control) Act of 1925 used to regulate trading in securities. Under

this Act, The Bombay stock exchange was recognized in 1927 and Ahmedabad in 1937.

During the war boom, a number of stock exchanges were organized even in Bombay,

Ahmedabad and other centers, but they were not recognized. Soon after it became a central

subject, central legislation was proposed and a committee headed by A.D.Gorwala went into the

bill for securities regulation. On the basis of the committee's recommendations and public

discussion, the securities contracts (regulation) Act became law in 1956.

1.1.1 OBJECTIVES OF STUDY:

1. To study various trends in derivative market.

2. Comparison of the profits/losses in cash market and derivative market.

3. To find out profit/losses position of the option writer and option holder.

4. To study in detail the role of the future and options.

5. To study the role of derivatives in Indian financial market.

6. To study various trends in derivative market.

7. Comparison of the profits/losses in cash market and derivative market.

8. To find out profit/losses position of the option writer and option holder.

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9. To study in detail the role of the future and options.

10. To study the role of derivatives in Indian financial market.

1.1.2 NEED OF THE STUDY

Different investment avenues are available investors. Stock market also offers good

investment opportunities to the investor alike all investments, they also carry certain risks.

The investor should compare the risk and expected yields after adjustment off tax on various

instruments while talking investment decision the investor may seek advice from expartry

and consultancy include stock brokers and analysts while making investment decisions. The

objective here is to make the investor aware of the functioning of the derivatives.

Derivatives act as a risk hedging tool for the investors. The objective if to help the investor in

selecting the appropriate derivates instrument to the attain maximum risk and to construct the

portfolio in such a manner to meet the investor should decide how best to reach the goals

from the securities available.

To identity investor objective constraints and performance, which help formulate the

investment policy?

The develop and improvement strategies in the with investment policy formulated. They will

help the selection of asset classes and securities in each class depending up on their risk

return attributes.

1.1.3 SCOPE OF THE STUDY

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The study is limited to “Derivatives” with special reference to futures and options in the

Indian context; the study is not based on the international perspective of derivative markets.

The study is limited to the analysis made for types of instruments of derivates each

strategy is analyzed according to its risk and return characteristics and derivatives performance

against the profit and policies of the company.

1.1.4 LIMITATION OF THE STUDY

The subject of derivates if vast it requires extensive study and research to understand the

dept of the various instrument operating in the market only a recent plenomore. But various

international examples have also been added to make the study more comfortable.

There are various other factors also which define the risk and return preferences of an

investor how ever the study was only contained towards the risk maximization and profit

maximization objective of the investor.

The derivative market is a dynamic one premiums, contract rates strike price fluctuate on

demand and supply basis. Therefore data related to last few trading months was only consider

and interpreted.

1.2 DEFINITION OF STOCK EXCHANGE:

"Stock exchange means any body or individuals whether incorporated or not, constituted

for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in

securities."

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It is an association of member brokers for the purpose of self-regulation and protecting

the interests of its members. It can operate only if it is recognized by the Government under the

securities contracts (regulation) Act, 1956. The recognition is granted under section 3 of the Act

by the central government, Ministry of Finance.

BYLAWS:

Besides the above act, the securities contracts (regulation) rules were also made in 1957

to regulate certain matters of trading on the stock exchanges. There are also bylaws of the

exchanges, which are concerned with the following subjects.

Opening/closing of the stock exchanges, timing of trading, regulation of blank transfers,

regulation of badla or carryover business, control of the settlement and other activities of the

stock exchange, fixation of margins, fixation of market prices or making up prices, regulation of

taravani business (jobbing), etc., regulation of brokers trading, brokerage charges, trading rules

on the exchange, arbitration and settlement of disputes, settlement and clearing of the trading etc.

1.2.1 REGULATION OF STOCK EXCHANGES:

The securities contracts (regulation) act is the basis for operations of the stock exchanges

in India. No exchange can operate legally without the government permission or recognition.

Stock exchanges are given monopoly in certain areas under section 19 of the above Act to ensure

that the control and regulation are facilitated. Recognition can be granted to a stock exchange

provided certain conditions are satisfied and the necessary information is supplied to the

government. Recognition can also be withdrawn, if necessary. Where there are no stock

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exchanges, the government can license some of the brokers to perform the functions of a stock

exchange in its absence.

1.2.2 SECURITIES AND EXCHANGE BOARD OF INDIA(SEBI):

SEBI was set up as an autonomous regulatory authority by the Government of India in

1988 " to protect the interests of investors in securities and to promote the development of, and

to regulate the securities market and for matters connected therewith or incidental thereto." It is

empowered by two acts namely the SEBI Act, 1992 and the securities contract(regulation)Act,

1956 to perform the function of protecting investor's rights and regulating the capital markets.

1.2.3 BOMBAY STOCK EXCHANGE

This stock exchange, Mumbai, popularly known as "BSE" was established in 1875 as " The

Native share and stock brokers association", as a voluntary non-profit making association. It has

an evolved over the years into its present status as the premiere stock exchange in the country. It

may be noted that the stock exchanges the oldest one in Asia, even older than the Tokyo Stock

exchange which was founded in 1878.

The exchange, while providing an efficient and transparent market for trading in

securities, upholds the interests of the investors and ensures redressed of their grievances,

whether against the companies or its own member brokers. It also strives to educate and

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enlighten the investors by making available necessary informative inputs and conducting

investor education programmes.

A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public

representatives and an executive director is the apex body, which decides the policies and

regulates the affairs of the exchange. The Executive director as the chief executive officer is

responsible for the day today administration of the exchange. The average daily turnover of the

exchange during the year 2000-01(April-March) was Rs 3984.19 crs and average number of

daily trades 5.69 laces. However the average daily turnover of the exchange during the

year 2001-02 has declined to Rs. 1244.10 crs and number of average daily trades during the

period to 5.17 laces.The average daily turn over of the exchange during the year 2002-03 has

declined and number of average daily trades during the period is also decreased.

The Ban on all deferral products like BLESS AND ALBM in the Indian capital markets by

SEBI i.e. July 2, 2001, abolition of account Period settlements, introduction of compulsory

rolling settlements in all scrip’s traded on the exchanges i.e. Dec 31,2001, etc., have adversely

impacted the liquidity and consequently there is a considerable decline in the daily turn over at

the exchange. The average daily turn over of the exchange present scenario is 110363 (Laces)

and number of average daily trades 1057(Laces)

BSE INDICES:

In order to enable the market participants, analysts etc., to track the various ups

and downs in the Indian stock market, the Exchange has introduced in 1986 an equity stock

index called BSE-SENSEX that subsequently became the barometer of the moments of the share

prices in the Indian stock market. It is a "Market capitalization-weighted" index of 30

component stocks representing a sample of large, well-established and leading companies. The

base year of Sensex is 1978-79. The Sensex is widely reported in both domestic and

international markets through print as well as electronic media.

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Sensex is calculated using a market capitalization weighted method. As per this

methodology, the level of the index reflects the total market value of all 30-component stocks

from different industries related to particular base period. The total market value of a company

is determined by multiplying the price of its stock by the number of shares outstanding.

Statisticians call an index of a set of combined variables (such as price and number of shares) a

composite Index. An Indexed number is used to represent the results of this calculation in order

to make the value easier to work with and track over a time. It is much easier to graph a chart

based on Indexed values than one based on actual values world over majority of the well-known

Indices are constructed using “Market capitalization weighted method ".

In practice, the daily calculation of SENSEX is done by dividing the aggregate market

value of the 30 companies in the Index by a number called the Index Divisor. The Divisor is the

only link to the original base period value of the SENSEX. The Divisor keeps the Index

comparable over a period of time and if the reference point for the entire Index maintenance

adjustments. SENSEX is widely used to describe the mood in the Indian Stock markets. Base

year average is changed as per the formula

New base year average = Old base year average*(New market Value/old market value)

1.2.4 NATIONAL STOCK EXCHANGE

The NSE was incorporated in Nov 1992 with an equity capital of Rs. 25 crs. The

International securities consultancy (ISC) of Hong Kong has helped in setting up NSE. ISC has

prepared the detailed business plans and installation of hardware and software systems. The

promotions for NSE were financial institutions, insurances companies, banks and SEBI capital

market ltd, Infrastructure leasing and financial services ltd and stock holding corporation ltd.

It has been set up to strengthen the move towards professionalisation of the capital market

as well as provide nation wide securities trading facilities to investors.

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NSE is not an exchange in the traditional sense where brokers own and manage the

exchange. A two tier administrative set up involving a company board and a governing aboard

of the exchange is envisaged.

NSE is a national market for shares PSU bonds, debentures and government securities since

infrastructure and trading facilities are provided.

NSE - NIFTY:

The NSE on April 22, 1996 launched a new equity Index. The NSE-50. The new Index

which replaces the existing NSE-100 Index is expected to serve as an appropriate Index for the

new segment of futures and options.

“Nifty " means National Index for Fifty Stocks.

The NSE-50 comprises 50 companies that represent 20 broad Industry groups with an

aggregate market capitalization of around Rs. 1,70,000 crs. All companies included in the Index

have a market capitalization in excess of Rs 500 crs each and should have traded for 85% of

trading days at an impact cost of less than 1.5%.

The base period for the index is the close of prices on Nov 3, 1995, which makes one year of

completion of operation of NSE’s capital market segment. The base value of the Index has been

set at 1000.

NSE - MIDCAP INDEX:

The NSE midcap Index or the Junior Nifty comprises 50 stocks that represents 21 board

Industry groups and will provide proper representation of the midcap segment of the Indian

capital Market. All stocks in the Index should have market capitalization of greater than Rs. 200

crs and should have traded 85% of the trading days at an impact cost of less 2.5%.

The base period for the index is Nov 4, 1996, which signifies two years for completion of

operations of the capital market segment of the operations. The base value of the Index has been

set at 1000.

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Average daily turn over of the present scenario 258212 (Lacs) and number of average

daily trades 2160 (Lacs).

At present, there are 24 stock exchanges recognized under the securities contract

(regulation) Act, 1956. They are

List of Stock Exchanges recognized under the securities contract (regulation) Act, 1956

NAME OF THE STOCK EXCHANGE YEAR

Bombay stock exchange,

Ahmedabad share and stock brokers association

Calcutta stock exchange association Ltd,

Delhi stock exchange association Ltd,

Madras stock exchange association Ltd,

Indoor stock brokers association,

Bangalore stock exchange,

Hyderabad stock exchange,

Cochin stock exchange,

Pune stock exchange Ltd,

U.P stock exchange association Ltd,

Ludhiana stock exchange association Ltd,

Jaipur stock exchange Ltd,

Gauhathi stock exchange Ltd,

Mangalore stock exchange Ltd,

1875

1957

1957

1957

1957

1958

1963

1943

1978

1982

1982

1983

1983-84

1984

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Maghad stock exchange Ltd, Patna,

Bhubaneshwar stock exchange association Ltd,

Over the counter exchange of India, Bombay,

Saurasthra kutch stock exchange Ltd,

Vsdodara stock exchange Ltd,

Coimbatore stock exchange Ltd,

The meerut stock exchange Ltd,

1National stock exchange Ltd,

Integrated stock exchange,

1985

1986

1989

1989

1990

1991

1991

1991

1991,1999

1.3 DERIVATIVES

MEANING:

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 fluctuations in the

underlying asset prices. However, by locking-in asset prices, derivative products minimize the

impact of fluctuations in asset prices on the profitability and cash flow situation of risk-averse

investors.

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Derivatives are risk management instruments, which derive their value from an

underlying asset. The underlying asset can be bullion, index, share, bonds, currency, interest etc.

Annual turnover of the derivatives is increasing each year from 1986 onwards,

Year Annual turnover

1986 146 millions

1992 453 millions

1998 1329 millions

2002 & 2003 it has reached to equivalent stage of cash market

Derivatives are used by banks, securities firms, companies and investors to hedge risks, to

gain access to cheaper money and to make profits Derivatives are likely to grow even at a faster

rate in future they are first of all cheaper to world have met the increasing volume of products

tailored to the needs of particular customers, trading in derivatives has increased even in the over

the counter markets.

In Britain unit trusts allowed to invest 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 weighted lightly than other

assets that appear on bank balance sheets. The size of these off-balance sheet assets that include

derivatives is more than seven times as large as balance sheet items at some American banks

causing concern to regulators

1.3.1 DEFINITION:

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Derivative is a product whose value is derived from the value of one or more basic

variables, called bases (underlying asset, index, or reference rate), in a contractual manner. The

underlying asset can be equity, forex, commodity or any other asset.

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, and 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.

Derivatives are the securities under the SC(R)A and hence the trading of derivatives is

governed by the regulatory framework under the SC(R)A.

1.3.2 PARTICIPANTS IN THE DERIVATIVES MARKET

The following three broad categories of participants who trade in the derivatives market:

1. Hedgers

2. Speculators and

3. Arbitrageurs

Hedgers:

Hedgers face risk associated with the price of an asset. They use futures or options

markets to reduce or eliminate this risk.

Speculators:

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:

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Arbitrageurs are in business to take advantage of a discrepancy between prices in

two different markets.

For example, they see the futures price of an asset getting out of line with the cash price; they

will take offsetting positions in the two markets to lock in a profit.

1.3.4 FUNCTIONS OF THE DERIVATIVES MARKET:

The derivatives market performs a number of economic functions. They are:

1. Prices in an organized derivatives market reflect the perception of market participants about

the future and lead the prices of underlying to the perceived future level.

2. Derivatives, due to their inherent nature, are linked to the underlying cash markets. With the

introduction of derivatives, the underlying market witnesses higher trading volumes because

of participation by more players who would not otherwise participate for lack of an

arrangement to transfer risk.

3. Speculative trades shift to a more controlled environment of derivatives market. In the

absence of an organized derivatives market, speculators trade in the underlying cash markets.

4. An important incidental benefit that flows from derivatives trading is that it acts as a catalyst

for new entrepreneurial activity.

5. Derivatives markets help increase savings and investment in the long run. Transfer of risk

enables market participants to expand their volume of activity.

1.3.5 TYPES OF DERIVATIVES

The most commonly used derivatives contracts are forwards, futures and options.

Here various derivatives contracts that have come to be used are given briefly:

1. Forwards

2. Futures

3. Options

4. Warrants

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5. LEAPS

6. Baskets

7. Swaps

8. Swaptions

1. Forwards:

A forward contract is customized contract between two entities, where settlement

takes place on a specific date in the future at today’s pre-agreed price

2. 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.

3. 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. Warrants:

Options generally have two lives of up to one year, the majority of options traded

on options exchanges having a minimum maturity of nine months. Longer-dated options are

called warrants and are generally traded over-the-counter.

5. Leaps:

The acronym LEAPS means Long-term Equity Anticipation Securities. These are

options having a maturity of up to three years.

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6. Baskets:

Basket options are options on portfolios of underlying assets. The underlying asset is

usually a moving average of a basket of assets. Equity index options are a form of basket

options.

7. 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.

8. Swaptions:

Swaptions are options to buy or sell 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 markets 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.

1.3.6 DERIVATIVES INSTRUMENTS IN INDIA

The first derivative product to be introduced in the Indian securities market is going to be

"INDEX FUTURES". In the world, first index futures were traded in U.S. on Kansas City Board

of Trade (KCBT) on Value Line Arithmetic Index (VLAI) in 1982.

Organized exchanges began trading options on equities in 1973, where as exchange traded

debt options did not appear until 1982, on the other hand fixed income futures began trading in

1975, but equity related futures did not begin until 1982.

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1.3.7 DERIVATIVES SEGMENT IN BSE & NSE

On June 9,2000 BSE & NSE became the first exchanges in India to introduce trading in

exchange traded derivative product with the launch of index futures on sense and Nifty futures

respectively.

Index futures was follows by launch of index options in June 2001, stock options in July

2001 and stock futures in Nov 2001.Presently stock futures and options available on 41 well-

capitalized and actively traded scripts mandated by SEBI.

Nifty is the underlying asset of the Index Futures at the Futures & Options segment of NSE

with a market lot of 200 and the BSE 30 Sensex is the underlying stock index with the market lot

of 50. This difference of market lot arises due to a minimum specification of a contract value of

Rs. 2 lakhs by Securities Exchange Board of India. A contract value is contracting Index laid by

its market lot. For e.g. If Sensex is 4730 then the contract value of a futures Index having Sensex

as underlying asset will Be 50 x 4730 = Rs. 2,36,500. Similarly if Nifty is 1462.7, its futures

contract value will be 200 x 1462.7 = Rs.2, 92,540/-.

Every transaction shall be in multiple of market lot. Thus, Index futures at NSE shall be traded in multiples of 200 and at BSE in multiples of 50

1.3.8 CONTRACT PERIODS:

At any point of time there will always be available near three months contract periods. For

e.g. in the month of June 2009 one can enter into either June Futures contract or July Futures

contract or August Futures Contract. The last Thursday of the month specified in the contract

shall be the final settlement date for that contract at both NSE as well BSE. Thus June 29, July

27 and August 31 shall be the last trading day or the final settlement date for June Futures

contract, July Futures Contract and August Futures Contract respectively.

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When one futures contract gets expired, a new futures contract will get introduced

automatically. For instance, on 30th June, June futures contract becomes invalidated and a

September Futures Contract gets activated.

1.3.9 SETTLEMENT:

Settlement of all Derivatives trades is in cash mode. There is Daily as well as Final

Settlement.

Outstanding positions of a contract can remain open till the last Thursday of that month.

As long as the position is open, the same will be marked to Market at the Daily Settlement Price,

the difference will be credited or debited accordingly and the position shall be brought forward

to the next day at the daily settlement price. Any position which remains open at the end of the

final settlement day (i.e., last Thursday) shall be closed out by the Exchange at the Final

Settlement Price which will be the closing spot value of the underlying (Nifty or Sensex, or

respective stocks as the case may be).

1.3.10 Regulation for Derivatives Trading

SEBI set up a 24-member committee under Chairmanship of Dr.L.C. Gupta to

develop the appropriate regulatory framework for derivatives trading in India. The committee

submitted its report in March 1998. On May 11, 1998 SEBI accepted the recommendations of

the committee and approved the phased introduction of derivatives trading in India beginning

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with stock index futures. SEBI also approved the “suggestive bye-laws” recommended by the

committee for regulation and control of trading and settlement of derivatives contracts.

The provisions in the SC(R) A and the regulatory framework developed there under

govern trading in securities. The amendment of the SC(R) A to include derivatives within the

ambit of ‘securities’ in the SC(R) A made trading in derivatives possible within the framework

of the Act.

1. Any exchange fulfilling the eligibility criteria as prescribed in the L C Gupta committee

report may apply to SEBI for grant of recognition under Section 4 of the SC(R) a, 1956 to

start trading derivatives. The derivatives exchange/segment should have a separate governing

council and representation of trading / clearing members shall be limited to maximum of

40% of the total members of the governing council. The exchange shall regulate the sales

practices of its members and will obtain approval of SEBI before start of trading in any

derivative contract

2. The exchange shall have minimum 50 members.

3. The members of an existing segment of the exchange will not automatically become the

members of derivative segment. The members of the derivative segment need to fulfill the

eligibility conditions as laid down by the L C Gupta committee.

4. The clearing and settlement of derivatives trades shall be through a SEBI approved clearing

corporation / house. Clearing corporation / houses complying with the eligibility conditions

as laid down by the committee have to apply to SEBI for grant of approval.

5. Derivative brokers/dealers and clearing members are required to seek registration from SEBI.

6. The minimum contract value shall not be less than Rs. 2 Lakh. Exchanges should also submit

details of the futures contract they propose to introduce.

7. The trading members are required to have qualified approved user and sales person who have

passed a certification programme approved by SEBI.

While from the purely regulatory angle, a separate exchange for trading would be a

better arrangement. Considering the constraints in infrastructure facilities, the existing stock

(cash) exchanges may also be permitted to trade derivatives subject to the following conditions.

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I. Trading should take place through an on-line screen based trading system.

II. An independent clearing corporation should do the clearing of the derivative market.

III. The exchange must have an online surveillance capability, which monitors positions, price

and volumes in real time so as to deter market manipulation price and position limits

should be used for improving market quality.

IV. Information about trades quantities, and quotes should be disseminated by the exchange in

the real time over at least two information-vending networks, which are accessible to

investors in the country.

V. The exchange should have at least 50 members to start derivatives trading.

VI. 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.

VII. 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 present governance system of exchanges.

VIII. The chairman of the governing council of the derivative division / exchange should be a

member of the governing council. If the chairman is broker / dealer, then he should not

carry on any broking or dealing on any exchange during his tenure.

IX. No trading/clearing member should be allowed simultaneously to be on the governing

council both derivatives market and cash market.

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FUTURES

2.1 FUTURES

Futures contract is a firm legal commitment between a buyer & seller in which they

agree to exchange something at a specified price at the end of a designated period of time. The

buyer agrees to take delivery of something and the seller agrees to make delivery.

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2.2 STOCK INDEX FUTURES

Stock Index futures are the most popular financial futures, which have been

used to hedge or manage the systematic risk by the investors of Stock Market. They are called

hedgers who own portfolio of securities and are exposed to the systematic risk. Stock Index is

the apt hedging asset since the rise or fall due to systematic risk is accurately shown in the Stock

Index. Stock index futures contract is an agreement to buy or sell a specified amount of an

underlying stock index traded on a regulated futures exchange for a specified price for settlement

at a specified time future.

Stock index futures will require lower capital adequacy and margin requirements

as compared to margins on carry forward of individual scrips. The brokerage costs on index

futures will be much lower.

Savings in cost is possible through reduced bid-ask spreads where stocks are

traded in packaged forms. The impact cost will be much lower in case of stock index futures as

opposed to dealing in individual scrips. The market is conditioned to think in terms of the index

and therefore would prefer to trade in stock index futures. Further, the chances of manipulation

are much lesser.

The Stock index futures are expected to be extremely liquid given the speculative

nature of our markets and the overwhelming retail participation expected to be fairly high. In the

near future, stock index futures will definitely see incredible volumes in India. It will be a

blockbuster product and is pitched to become the most liquid contract in the world in terms of

number of contracts traded if not in terms of notional value. The advantage to the equity or cash

market is in the fact that they would become less volatile as most of the speculative activity

would shift to stock index futures. The stock index futures market should ideally have more

depth, volumes and act as a stabilizing factor for the cash market. However, it is too early to base

any conclusions on the volume or to form any firm trend.

The difference between stock index futures and most other financial futures

contracts is that settlement is made at the value of the index at maturity of the contract.

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2.3 FUTURES TERMINOLOGY

Contract Size

The value of the contract at a specific level of Index. It is

Index level * Multiplier.

Multiplier

It is a pre-determined value, used to arrive at the contract size. It

is the price per index point.

Tick Size

It is the minimum price difference between two quotes

of similar nature.

Contract Month

The month in which the contract will expire.

Expiry Day

The last day on which the contract is available for trading.

Open interest

Total outstanding long or short positions in the market at any specific point in

time. As total long positions for market would be equal to total short positions, for

calculation of open Interest, only one side of the contracts is counted.

Volume

No. Of contracts traded during a specific period of time. During a day, during a

week or during a month.

Long position

Outstanding/unsettled purchase position at any point of time.

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Short position

Outstanding/ unsettled sales position at any point of time.

Open position

Outstanding/unsettled long or short position at any point of time.

Physical delivery

Open position at the expiry of the contract is settled through delivery of the

underlying. In futures market, delivery is low.

Cash settlement

Open position at the expiry of the contract is settled in cash. These contracts

Alternative Delivery Procedure (ADP) - Open position at the expiry of the contract is settled

by two parties - one buyer and one seller, at the terms other than defined by the exchange.

World wide a significant portion of the energy and energy related contracts (crude oil,

heating and gasoline oil) are settled through Alternative Delivery Procedure.

2.4 Pay off for futures:

A Pay off is the likely profit/loss that would accrue to a market participant with change in

the price of the underlying asset. Futures contracts have linear payoffs. In simple words, it means

that the losses as well as profits, for the buyer and the seller of futures contracts, are unlimited.

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Pay off for Buyer of futures: (Long futures)

The pay offs for a person who buys a futures contract is similar to the pay off for a

person who holds an asset. He has potentially unlimited upside as well as downside. Take the

case of a speculator who buys a two-month Nifty index futures contract when the Nifty

stands at 1220. The underlying asset in this case is the Nifty portfolio. When the index moves

up, the long futures position starts making profits and when the index moves down it starts

making losses

.

Pay off for seller of futures: (short futures)

The pay offs for a person who sells a futures contract is similar to the pay off for a

person who shorts an asset. He has potentially unlimited upside as well as downside. Take

the case of a speculator who sells a two-month Nifty index futures contract when the Nifty

stands at 1220. The underlying asset in this case is the Nifty portfolio. When the index moves

down, the short futures position starts making profits and when the index moves up it starts

making losses.

25

OPTIONS

3.1 OPTIONS

An option agreement is a contract in which the writer of the option grants the buyer of the

option the right to purchase from or sell to the writer a designated instrument at a specific price

within a specified period of time.

Certain options are shorterm in nature and are issued by investors another group of

options are long-term in nature and are issued by companies.

26

3.2 OPTIONS TERMINOLOGY:

Call option:

A call is an option contract giving the buyer the right to purchase the stock.

Put option:

A put is an option contract giving the buyer the right to sell the stock.

Expiration date:

It is the date on which the option contract expires.

Strike price:

It is the price at which the buyer of a option contract can purchase or sell the stock

during the life of the option

Premium:

Is the price the buyer pays the writer for an option contract.

Writer:

The term writer is synonymous to the seller of the option contract.

Holder:

The term holder is synonymous to the buyer of the option contract.

Straddle:

A straddle is combination of put and calls giving the buyer the right to either buy

or sell stock at the exercise price.

Strip:

A strip is two puts and one call at the same period.

Strap:

27

A strap is two calls and one put at the same strike price for the same period.

Spread:

A spread consists of a put and a call option on the same security for the same time

period at different exercise prices.

The option holder will exercise his option when doing so provides him a benefit over

buying or selling the underlying asset from the market at the prevailing price. These are three

possibilities.

1. In the money: An option is said to be in the money when it is

advantageous to exercise it.

2. Out of the money: The option is out of money if it not advantageous to exercise it.

3. At the money: IF the option holder does not lose or gain whether he exercises his option

or buys or sells the asset from the market, the option is said to be at the money. The exchanges

initially created three expiration cycles for all listed options and each issue was assigned to one

of these three cycles.

January, April, July, October.

February, March, August, November.

March, June, September, and December.

In India, all the F and O contracts whether on indices or individual stocks are available for

one or two or three months series and they expire on the Thursday of the concerned month.

3.3 CALL OPTION:

An option that grants the buyer the right to purchase a designated instrument is

called a call option. A call option is a contract that gives its owner the right, but not the

obligation, to buy a specified price on or before a specified date.

An American call option can be exercised on or before the specified date only. European

options can be exercised on the specified date only.

28

3.4 PUT OPTION:

An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time. This is the opposite of a call option, which gives the holder the right to buy shares.

A put becomes more valuable as the price of the underlying stock depreciates relative to the strike price. For example, if you have one Mar 09 Taser 10 put, you have the right to sell 100 shares of Taser at $10 until March 2008 (usually the third Friday of the month). If shares of Taser fall to $5 and you exercise the option, you can purchase 100 shares of Taser for $5 in the market and sell the shares to the option's writer for $10 each, which means you make $500 (100 x ($10-$5)) on the put option. Note that the maximum amount of potential proft in this example ignores the premium paid to obtain the put option.

3.5 FACTORS DETERMINIG OPTION VALUE:

Stock price

Strike price

Time to expiration

Volatility

Risk free interest rate

Dividend

3.6 DIFFERENCE BETWEEN FUTURES & OPTION:

FUTURES

1) Both the parties are obligated to perform.

2) With futures premium is paid by either party.

OPTIONS

1) Only the seller (writer) is obligated to perform.

2) With options, the buyer pays the seller a

29

3) The parties to futures contracts must perform

at the settlement date only. They are not

obligated to perform before that date.

4) The holder of the contract is exposed to the

entire spectrum of downside risk and had the

potential for all upside return.

5) In futures margins to be paid. They are

approximate 15-20% on the current stock

price.

premium.

3) The buyer of an options contract can exercise

any time prior to expiration date.

4) The buyer limits the downside risk to the option

premium but retain the upside potential.

5) In options premiums to be paid. But they are

very less as compared to the margins.

3.7 Advantages of option trading:

Risk management: put option allow investors holding shares to hedge against a possible

fall in their value. This can be considered similar to taking out insurance against a fall in

the share price.

Time to decide: By taking a call option the purchase price for the shares is locked in.

This gives the call option holder until the Expiry day to decide whether or exercised the

option and buys the shares. Likewise the taker of a put option has time to decide whether

or not to sell the shares.

Speculations: The ease of trading in and out of option position makes it possible to trade

options with no intention of ever exercising them. If investor expects the market to rise,

they may decide to buy call options. If expecting a fall, they may decide to buy put

options. Either way the holder can sell the option prior to expiry to take a profit or limit a

loss. Trading options has a lower cost than shares, as there is no stamp duty payable

unless and until options are exercised.

Leverage: Leverage provides the potential to make a higher return from a smaller initial

outlay than investing directly however leverage usually involves more risks than a direct

30

investment in the underlying share. Trading in options can allow investors to benefit from

a change in the price of the share without having to pay of the share.

3.8 Summary of options

Call option buyer Call option writer (seller)

Pays premium

Right to exercise and buy the share

Profits from rising prices

Limited losses, potentially unlimited

gain

Receives premium

Obligation to sell shares if exercised

Profits from falling prices or remaining

neutral

Potentially unlimited losses, limited gain

Put option buyer Put option writer (seller)

Pays premium

Right to exercise and sell shares

Profits from falling prices

Limited losses, potentially unlimited

gain

Receives premium

Obligation to buy shares if exercised

Profits from rising prices or remaining

neutral

Potentially unlimited losses, limited gain

31

ABOUT SHAREKHAN

4.1 SHAREKHAN

Sharekhan is one of India's largest and leading financial services companies. It is an

online stock trading company of SSKI Group (S.S. Kantilal Ishwarlal Securities Limited) which

has been a provider of India-based investment banking and corporate finance service for over 80

years.

32

SSKI caters to most of the prominent financial institutions, foreign and domestic,

investing in Indian equities. It has been valued for its strong research-led investment ideas,

superior client servicing track record and exceptional execution skills.

The key features of sharekhan are as follows:

You get freedom from paperwork.

There are instant credit and money transfer facilities.

You can trade from any net enabled PC.

After hour orders facilities.

You can go for online orders over the phone.

Timely advice and research reports

Real-time Portfolio tracking.

Information and Price alerts.

Sharekhan provides assistance and the advice like no one else could. It has created

special information tools to help answer any queries. Sharekhan’s first step program, built

specifically for new investors, is testament to of its commitment to being your guide throughout

your investing life cycle.

4.2 SHAREKHAN SERVICES:

The tag line of Sharekhan says that it is your guide to the financial jungle. As per the tag

line there are many amazing services that Sharekhan offers like technical research, fundamental

research, share shops, portfolio management, dial-n-trade, commodities trade, online services,

depository services, equity and derivatives trading (including currency trading). With

33

Sharekhan’s online trading account, you can buy and sell shares at anytime and from anywhere

you like.

With a physical presence in over 300 cities of India through more than 800 "Share

Shops" with more than 3000 employees, and an online presence through Sharekhan.com, India's

premier, it reaches out to more than 8, 00,000 trading customers.

A Sharekhan outlet online destination offers the following services:

Online BSE and NSE executions (through BOLT & NEAT terminals)

Free access to investment advice from Sharekhan's Research team

Sharekhan Value Line (a monthly publication with reviews of recommendations, stocks

to watch out for etc)

Daily research reports and market review (High Noon & Eagle Eye)

Pre-market Report (Morning Cuppa)

Daily trading calls based on Technical Analysis

Cool trading products (Daring Derivatives and Market Strategy)

Personalized Advice

Live Market Information

Depository Services: Demat Transactions

Derivatives Trading (Futures and Options)

Commodities Trading

IPOs & Mutual Funds Distribution

Internet-based Online Trading: Speed Trade

34

Sharekhan has one of the best state-of-art web portals providing fundamental and

statistical information across equity, mutual funds and IPOs. Surfing can be done across 5,500

companies for in-depth information, details about more than 1,500 mutual fund schemes and IPO

data. Other market related details such as board meetings, result announcements, FII

transactions, buying/selling by mutual funds and much more can also be accessed.

It provides a complete life-cycle of investment solution in Equities, Derivatives,

Commodities, IPO, Mutual Funds, Depository Services, Portfolio Management Services and

Insurance. It also offers personalized wealth management services for High Net worth

individuals.

4.3 ONLINE SERVICES

The online trading account can be chosen as per trading habits and preferences, that is the

classic account for most investors and speed trade for active day traders. Sharekhan also provides

a free software called “Trade tiger” to all its account holders.

The Classic Account enables you to trade online for investing in Equities and

Derivatives on the NSE via sharekhan.com; it gives access to all the research content and also

comes with a free Dial-n-Trade service enabling to buy shares using the telephone.

Its features are:

Streaming quotes (using the applet based system)

Multiple watch lists

Integrated Banking, demat and digital contracts

35

Instant credit and transfer

Real-time portfolio tracking with price alerts and, of course, the assurance of secure

transactions

The Trade Tiger is a next-generation online trading product that brings the power of the

broker's terminal to your PC. It's the perfect trading platform for active day traders. Its features

are:

A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX,

NCDEX, Mutual Funds, IPO’s

Multiple Market Watch available on Single Screen

Multiple Charts with Tick by Tick Intraday and End of Day Charting powered with

various Studies

Graph Studies include Average, Band- Bollinger, Know Sure Thing, MACD, RSI,

etc

Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines

User can save his own defined screen as well as graph template, that is, saving the

layout for future use

User-defined alert settings on an input Stock Price trigger

Tools available to gauge market such as Tick Query, Ticker, Market Summary,

Action Watch, Option Premium Calculator, Span Calculator

Shortcut key for FAST access to order placements & reports

Online fund transfer activated with 12 Banks

36

Sharekhan provides you the facility to trade in Commodities through Sharekhan

Commodities Pvt. Ltd. a wholly owned subsidiary of its parent SSKI. It trades on two

major commodity exchanges of the country:

Multi Commodity Exchange of India Ltd, Mumbai (MCX) and

National Commodity and Derivative Exchange, Mumbai (NCDEX).

For trading in any commodity, initial margin of around 10% on any commodity is to be

maintained. Sharekhan has launched its own commodity derivatives micro-site. The site is

available through the Sharekhan home page www.sharekhan.com. Along with the site Sharekhan

has launched several commodity derivatives products (both research and trading) too. The

products have been listed below:

Commodities Buzz: a daily view on precious metals and agro commodities.

Commodities Beat: a summary of the days trading activity.

Traders Corner: Under commodity trading calls, there are two types of trading calls:

Rapid Fire: (short-term calls for 1 day to 5 days updated daily)

Medium-term Plays: (medium-term calls for 1 month to 3 months updated

weekly or in between if needed)

Sharekhan Xclusive: the commodity research reports and analyses (periodical).

Market Scan: the daily commodity market data and statistics (end of day).

All these products are both e-mailed as newsletters and published on the commodity

derivatives site

37

DATA ANALYSIS

&

INFERENCE

38

GMR INFRASTRUCTURE

39

5.1 GMR Infrastructure

5.1.1 GMR INFRA PROFILE

GMR Group is a Bangalore headquartered global infrastructure major with interests in  the Airports, Energy, Highways and Urban infrastructure (including SEZ). In addition, the other focus area of the Group is the Agri-business with Sugar as its main product-line. The Group is also actively engaged in the areas of Education, Health, Hygiene and Sanitation, Empowerment & Livelihoods and Community-Based Programmes under its Foundation wing, reaffirming its grass root presence as change agents of society in the field of Corporate Social Responsibility. A dedicated division, the GMR Varalakshmi Foundation, manned by committed professionals, oversees and manages these projects across India.

With its foray into the Airports sector, the Group has established itself as a front runner and pioneer in the core infrastructure areas of the country.

Going forward, the Group will actively seek opportunities in core areas of the country’s infrastructure development including Transportation and Property Development. All these would be driven by a single minded path of translating the vision of the Group by building entrepreneurial organisations that make a difference to society through creation of value.

GMR International  

GMR Group seeks aggressive growth opportunities, by expanding its business bandwidth and presence in the global market place in the areas of Energy, Airports and property development around airports. International forays will help GMR improve earnings from new opportunities, access international talent and raise international capital at cheaper rates.

GMR International - a separate division was formed to harness these opportunities with its head quarters at London. GMR International will embrace the company’s Values and Beliefs and will build on its strengths to meet global standards of entrepreneurship, flexibility and effectiveness. It will be a dedicated international organisation with responsibility for investments and operations. As an owner, developer and operator building internationally competitive skills in procurement, operations and maintenance it will leverage GMR’s existing strengths in bidding, financing, project management, and partnership development.

GMR International manages the Group’s maiden foray into the global infrastructure market

40

Projects:

The Sabiha Gokcen International Airport

InterGen

Island Power

Airports Delhi International Airport (P) Limited          GMR Hyderabad International Airport Limited          Istanbul Sabiha Gokcen International Airport

Highways

Tambaram - Tindivanam          Tuni - Anakapalli          Ambala - Chandigarh          Adloor - Gundla Pochanpalli          Tindivanam - Ulunderpet          Farukhnagar - Jadcherla          Hyderabad-Vijaywada          Chennai Outer Ring Road

Agri Business

Sankili Sugar Plant          Ramdurg Sugar Complex          Haliyal Sugar Complex

Global Presence Projects    Having proven its credentials as a leading infrastructure conglomerate in India, GMR is expanding its operations globally. It now has presence in the following countries.

Nepal

Upper Karnali - Hydro Power Project (300 MW)

Himtal - Hydro Power Project (250 MW)

41

United Kingdom

InterGen - Energy

Netherlands

InterGen - Energy

Philippines

InterGen - Energy

Australia

InterGen - Energy

Mexico

InterGen - Energy

Istanbul, Turkey

Sabiha Gokcen International Airport - Airports

Singapore

Island Power 

Company Information

GMR Infrastructure Limited was originally incorporated on May 10, 1996 as a public limited company called Varalakshmi Vasavi Power Projects Limited in the State of Andhra Pradesh. On May 23, 1996 we received our certificate of commencement of business. On May 31, 1999 we changed our name to GMR Vasavi Infrastructure Finance Limited. On July 24, 2000 we changed our name to GMR Infrastructure Limited (GIL). On October 4, 2004 we shifted our registered office from the State of Andhra Pradesh to the State of Karnataka.

The Company is an infrastructure holding company formed to fund the capital requirements of the GMR Group’s initiatives in the infrastructure sector. GIL is engaged in development of various infrastructure projects in power and transportation sectors through several special purpose vehicles.

42

43

44

45

46

5.1.2 GMR INFRA MAY MONTH ANALYSIS

GMR INFRA MAY EQUITY TABLE:-

Symbol

Series

Date Prev Close

Open Price

High Price

Low Price

Last Price

Close Price

Average Price

Total Traded Quantity

Turnover in Lacs

GMRINFRA

EQ 4-May-09

113 118 119 115 116.35

116.6 117.27 4966641 5824.518409

GMRINFRA

EQ 5-May-09

116.6 117.5 122.4 115 118.85

119.35

119.71 7553513 9042.489716

GMRINFRA

EQ 6-May-09

119.35

120.8 122.9 113.35

116.4 115.25

119.36 6326565 7551.337826

GMRINFRA

EQ 7-May-09

115.25

116.7 118.45

114.15

116.55

116.15

116.06 5089291 5906.878162

GMRINFRA

EQ 8-May-09

116.15

117 117.7 112.1 117.1 117.1 115.61 3900000 4508.909404

GMRINFRA

EQ 11-May-09

117.1 118.75

119.65

111 111.15

111.9 113.67 3316682 3770.069377

GMRINFRA

EQ 12-May-09

111.9 112.9 117 110.55

115.85

115.95

114.15 4161604 4750.46704

GMRINFRA

EQ 13-May-09

115.95

117 117.8 110.15

110.55

111.3 114.24 4696165 5364.980309

GMRINFRA

EQ 14-May-09

111.3 110.5 112.95

105.6 112.25

112.4 110.83 3605092 3995.469767

GMRINFRA

EQ 15-May-09

112.4 113.65

117.7 112.25

112.5 113.4 115.06 4462193 5134.164822

GMRINFRA

EQ 18-May-09

113.4 122.9 147 122.9 134.7 137.3 135.08 62439 84.340472

GMRINFRA

EQ 19-May-09

137.3 145 157.95

121.65

149.3 152.95

145.66 21068986

30689.75392

GMRINFRA

EQ 20-May-09

152.95

148 165.95

142.35

159.7 158.45

159.52 11364457

18129.00169

47

GMRINFRA

EQ 21-May-09

158.45

158 173 158 172.2 170.25

167.96 18201627

30570.93059

GMRINFRA

EQ 22-May-09

170.25

171 173.65

161.15

168.15

168.65

167.66 11647961

19528.54452

GMRINFRA

EQ 25-May-09

168.65

170 171.45

162.3 164.2 164.9 165.19 5937486 9808.248222

GMRINFRA

EQ 26-May-09

164.9 168 172.4 155.25

158.5 157.45

166.26 12411987

20636.71993

GMRINFRA

EQ 27-May-09

157.45

161.1 167.3 161.1 163.6 163.7 164.27 10949461

17987.06952

GMRINFRA

EQ 28-May-09

163.7 164 168 160.85

163.45

162.4 163.65 10002596

16368.87623

GMRINFRA

EQ 29-May-09

162.4 165 169.4 162 162.9 164.55

166.61 12791895

21312.62356

Interpretation:-

48

This analysis is useful to know where to buy and sell the options such as Call and Puts.

Open Price=118 On 4th May 09

Low Price=110.15 On 13th May 09

High Price=173.65 On 22nd May 09

Close price=164.55 On 29th May 09

In the above graph I calculate Breakeven point for GMRINFRA Stock.

Break Even Point(BEP) = (High Price + Low Price)/2

= (173.65+110.15)/2

= 141.5

Again I found margin of safety (MOS)

(1) Margin of safety (mos) = opening share value – BEP

=118-141.5

=-23.5

So here margin of safety is negative value. So here investor gets more Loss and shorts. Here

investor can buy put options to get more profits. Investors should not go for call options at this

point

(2) Margin of safety (mos) =high share value –BEP

=173.65-141.5

=32.15

So here margin of safety is Positive value. So here investor gets more profits and longs. So

at this point investor can sell their Call options to get more profis.

(3) Margin of safety (mos) =LOW share value – BEP

=110.15-141.5

49

=-31.35

So here margin of safety is negative. so here investor gets more losses and more shorts.

Investor can sell their Put Option at this point to incur more profits.

GMRINFRA MAY CALL OPTION TABLE(Strike price=135)

Instrument

Symbol Option

Date Expiry Strike Price

Close

Settle Price

Turnover in Lacs

OPTSTK GMRINFRA

CA 4-May-09 28-May-09 135 8.05

3.1 0

OPTSTK GMRINFRA

CA 5-May-09 28-May-09 135 8.05

3.55 0

OPTSTK GMRINFRA

CA 6-May-09 28-May-09 135 2 2 6.85

OPTSTK GMRINFRA

CA 7-May-09 28-May-09 135 2 2.2 0

OPTSTK GMRINFRA

CA 8-May-09 28-May-09 135 2 2.1 0

OPTSTK GMRINFRA

CA 11-May-09 28-May-09 135 1 1 6.8

OPTSTK GMRINFR CA 12-May-09 28-May-09 135 1 1.45 0

50

A

OPTSTK GMRINFRA

CA 13-May-09 28-May-09 135 0.65

0.65 6.78

OPTSTK GMRINFRA

CA 14-May-09 28-May-09 135 0.65

0.65 0

OPTSTK GMRINFRA

CA 15-May-09 28-May-09 135 0.65

0.6 0

OPTSTK GMRINFRA

CA 18-May-09 28-May-09 135 0.65

11.15 0

OPTSTK GMRINFRA

CA 19-May-09 28-May-09 135 3 3 21.4

OPTSTK GMRINFRA

CA 20-May-09 28-May-09 135 3 25.9 0

OPTSTK GMRINFRA

CA 21-May-09 28-May-09 135 3 36.2 0

OPTSTK GMRINFRA

CA 22-May-09 28-May-09 135 3 34.35 0

OPTSTK GMRINFRA

CA 25-May-09 28-May-09 135 3 30.1 0

OPTSTK GMRINFRA

CA 26-May-09 28-May-09 135 3 22.65 0

OPTSTK GMRINFRA

CA 27-May-09 28-May-09 135 3 28.75 0

OPTSTK GMRINFRA

CA 28-May-09 28-May-09 135 3 0 0

51

OBSERVATIONS AND FINDINGS

MAY CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of GMRINFRA that is 1250 those who buy for 135 paid 3.1 Premium Per Share.

Settlement Price is 163.75 Spot price 163.75 Strike price 135.00 Amount 28.75 Premium Paid (-) 3.1 Net Profit 25.65*1250=32062.5 Buyer Profit = Rs 32062.5(Net Amount)

Because it is positive it is IN THE MONEY contract, hence buyer will get more profit, incase spot price increase buyer profit also increases.

52

SELLERS PAY OFF:

It is in the money for the buyer, so it is n out of the money for seller , hence his loss is also increases.

Strike price 135.00

Spot price 163.75

Amount -28.75

Premium Received 3.1

Loss -25.65*1250=-32062.5

Seller loss = Rs -32062.5(Loss)

Because it is negative it is out of the money, hence seller will get more loss, incase spot price decreases in below strike price, seller get profit in premium level.

GMRINFRA MAY PUT OPTION TABLE(Strike price=135):-

Instrument Symbol Option Date Expiry Strike Price

Settle Price

OPTSTK GMRINFRA PA 4-May-09 28-May-09 135 21.1

OPTSTK GMRINFRA PA 5-May-09 28-May-09 135 18.8

OPTSTK GMRINFRA PA 6-May-09 28-May-09 135 21.75

OPTSTK GMRINFRA PA 7-May-09 28-May-09 135 20.75

OPTSTK GMRINFRA PA 8-May-09 28-May-09 135 19.7

OPTSTK GMRINFRA PA 11-May-09 28-May-09 135 23.8

OPTSTK GMRINFRA PA 12-May-09 28-May-09 135 20.25

OPTSTK GMRINFRA PA 13-May-09 28-May-09 135 24.2

OPTSTK GMRINFRA PA 14-May-09 28-May-09 135 23.05

OPTSTK GMRINFRA PA 15-May-09 28-May-09 135 22

53

OPTSTK GMRINFRA PA 18-May-09 28-May-09 135 8.7

OPTSTK GMRINFRA PA 19-May-09 28-May-09 135 3.95

OPTSTK GMRINFRA PA 20-May-09 28-May-09 135 2.35

OPTSTK GMRINFRA PA 21-May-09 28-May-09 135 0.85

OPTSTK GMRINFRA PA 22-May-09 28-May-09 135 0.6

OPTSTK GMRINFRA PA 25-May-09 28-May-09 135 0.15

OPTSTK GMRINFRA PA 26-May-09 28-May-09 135 0.15

OPTSTK GMRINFRA PA 27-May-09 28-May-09 135 0

OPTSTK GMRINFRA PA 28-May-09 28-May-09 135 0

OBSERVATIONS AND FINDINGS

MAY PUT OPTION

54

BUYERS PAY OFF:

Those who have purchased put option at a strike price 135, the premium payable is 21.1.

On the expiry date the spot market price enclosed at 155.95. Strike Price 135 Spot price 155.95 Net Pay Off -20.95*1250=-26187.5 Already Premium paid is 21.1 So, he get loss up to Rs 26187.5

Because it is negative, out of the money contract, hence buyer gets more loss, incase spot price decrease in below strike price, buyer get profit in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if he is in profit and also seller has to get total profit.

Spot Price 155.95 Strike Price 135 Net Pay off 20.95*1250=26187.5

Already Premium Received 21.1So, he can get profit up to Rs 26187.5

Because it is positive, in the money Contract, hence seller gets more profit, incase Spot price decrease in below strike price seller can get loss in premium.

55

4-May

-09

6-May

-09

8-May

-09

10-May

-09

12-May

-09

14-May

-09

16-May

-09

18-May

-09

20-May

-09

22-May

-09

24-May

-09

26-May

-090

20406080

100120140160180

GMR(May Options) Strike Price=135

Put PriceCall PriceAverage GMR Price

Date

Price

From the above graph You can see that there is a drastic increase in share price of GMRINFRA due to QIP issue $500 million on May 14th 09. So that is the reason share price of GMRINFRA has increased drastically.

From the above news investors can buy call options to book profits in future. So in the above graph we can see that the GMRINFRA call prices has been increased from 14th may onwards .So its in the money for buyers who buy the call option. Its out of the money for the sellers of the call option.

By above graph we can get that Put Price is reverse to the Spot price. If the Spot price increases then put prices get decreases and if the spot price decreases then put prices starts increasing, So these both are inversely proportional to each other.

56

GMRINFRA MAY FUTURE ANALYSIS:-

The Objective of this analysis is to evaluate the profit/loss position futures . This analysis is based on sample data taken of GMR INFRA scrip. This analysis considered the May Contract on GMRINFRA. The lot size of GMRINFRA is 1250,the time period in which this analysis done is from 4-05-2009 to 28-05-2009.

Instrument

Symbol

Date Expiry Open

High

Low Close LTP Settle Price

No. of contracts

Turnover in acs

Open Int

FUTSTK

GMRINFRA

4-May-09

28-May-09

114.8

117.45

113.9

115.85

115.35

115.85 1349 7819.73 13775000

FUTSTK

GMRINFRA

5-May-09

28-May-09

115.6

122

115.6

119 118.35

119 2680 15975.69 14290000

FUTSTK

GMRINFRA

6-May-09

28-May-09

119 122.25

112.2

114.6 115.55

114.6 2351 13944.95 13865000

FUTSTK

GMRINFRA

7-May-09

28-May-09

116 117.5

113.2

115.7 116.4 115.7 1331 7675.46 14410000

FUTSTK

GMRINFRA

8-May-09

28-May-09

116.4

117

111.1

116.25

116.2 116.25 1505 8628.95 13980000

FUTSTK

GMRINFRA

11-May-09

28-May-09

117.5

118.7

110.2

111.35

110.6 111.35 1129 6389.69 14010000

FUTSTK

GMRINFRA

12-May-09

28-May-09

112.5

116.5

110.2

115.85

115.8 115.85 1521 8651.9 14605000

FUTSTK

GMRINFRA

13-May-09

28-May-09

116.25

117.5

110.35

111 111.05

111 1614 9199.92 14660000

FUTSTK

GMRINFRA

14-May-09

28-May-09

108 112.9

106.7

112.35

112.45

112.35 1210 6685.31 14835000

FUTSTK

GMRINFRA

15-May-09

28-May-09

113.5

117.3

112.25

113.25

112.4 113.25 1281 7353.81 14650000

FUTSTK

GMRINFRA

18-May-09

28-May-09

130 137.9

126.2

133.65

133.85

133.65 56 372.71 14590000

57

FUTSTK

GMRINFRA

19-May-09

28-May-09

144 156

121 152.95

150 152.95 5193 37561.15 13130000

FUTSTK

GMRINFRA

20-May-09

28-May-09

150.55

165.8

149.9

159.55

161.35

159.55 3652 29226.09 10380000

FUTSTK

GMRINFRA

21-May-09

28-May-09

160 174.1

159 171.95

173.4 171.95 7575 64043.81 13000000

FUTSTK

GMRINFRA

22-May-09

28-May-09

171.8

174

161.7

169.7 169.2 169.7 4733 39911.74 12290000

FUTSTK

GMRINFRA

25-May-09

28-May-09

170.7

172

162.8

165.5 164.95

165.5 2175 18036.04 10775000

FUTSTK

GMRINFRA

26-May-09

28-May-09

165 172.75

155.25

157.65

158.95

157.65 4685 39076.79 8760000

FUTSTK

GMRINFRA

27-May-09

28-May-09

162.9

167

162.15

164.05

164.5 164.05 2533 20823.31 7075000

FUTSTK

GMRINFRA

28-May-09

28-May-09

164.05

168.4

160.95

162.4 162.4 162.4 2779 22805.69 2320000

4-M

ay-0

95-

May

-09

6-M

ay-0

97-

May

-09

8-M

ay-0

99-

May

-09

10-M

ay-0

911

-May

-09

12-M

ay-0

913

-May

-09

14-M

ay-0

915

-May

-09

16-M

ay-0

917

-May

-09

18-M

ay-0

919

-May

-09

20-M

ay-0

921

-May

-09

22-M

ay-0

923

-May

-09

24-M

ay-0

925

-May

-09

26-M

ay-0

927

-May

-09

28-M

ay-0

9

0306090

120150180210

GMRINFRA(May Futures)

Average GMR PriceFuture Price

Date

Price

Future Market

58

BUYER SELLER

12/05/09(buying) 115.85 115.85

28/05/09(Closing Period) 162.4 162.4

Profit = 46.55 Loss = 46.55

Profit 46.55*1250=58187 Loss 46.55*1250=58187

Because buyer Future price will increase so, profit also increases. Seller Future price also increases so he can get loss. Incase seller Future will decreases, he can get profit.

The closing Price of GMRINFRA at the end of contract period is 162.4 and this is considered as settlement price.

5.1.3 GMR INFRA JUNE MONTH ANALYSIS

GMRINFRA JUNE EQUITY:-

Symbol Series

Date Prev Close

Open Price

High Price

Low Price

Last Price

Close Price

Average Price

Total Traded Quantity

Turnover in Lacs

GMRINFRA

EQ 1-Jun-09

164.55 167 176.4 162.55 175.2 175.1 171.15 19950076 34144.15905

GMRINFRA

EQ 2-Jun-09

175.1 178.9 180.85 168.1 172.2 172.9 173.62 15822276 27470.65369

GMRINFRA

EQ 3-Jun-09

172.9 176.9 177.35 167.15 171.95

172.75

173.15 11234059 19451.91789

GMRINFRA

EQ 4-Jun-09

172.75 172.1 179.9 172 178 177.75

177.94 16706677 29728.11388

GMRINF EQ 5-Jun- 177.75 180 183.5 169.05 170.4 170.5 177.04 17578054 31120.9527

59

RA 09 5 5 5

GMRINFRA

EQ 8-Jun-09

170.55 174.9 174.9 156.7 157.75

160.2 165.28 16210921 26793.31401

GMRINFRA

EQ 9-Jun-09

160.2 159.8 170 149.05 167.35

166.55

161.3 19634278 31670.47058

GMRINFRA

EQ 10-Jun-09

166.55 169 172 158 162.9 162.55

165.35 12369000 20452.47894

GMRINFRA

EQ 11-Jun-09

162.55 163.4 145.36 136 137.45

138 147.29 14231441 22669.03497

GMRINFRA

EQ 12-Jun-09

138 157 163.2 152.4 158.8 159.45

158.88 23539810 37400.17848

GMRINFRA

EQ 15-Jun-09

159.45 155 157 146 148.05

147.65

150.89 13210538 19933.32656

GMRINFRA

EQ 16-Jun-09

147.65 145.1 153 142.1 150.6 151.35

149.6 11553437 17284.0867

GMRINFRA

EQ 17-Jun-09

151.35 151 154 142.1 143.95

143.95

148.91 10745434 16001.49497

GMRINFRA

EQ 18-Jun-09

143.95 145 146.8 137.2 143.85

143.15

142 11585108 16450.62817

GMRINFRA

EQ 19-Jun-09

143.15 145.05

148.9 141.8 147.95

147.3 146 8967831 13093.16327

GMRINFRA

EQ 22-Jun-09

147.3 149.9 151 138.65 139 139.75

144.75 11218177 16237.97072

GMRINFRA

EQ 23-Jun-09

139.75 135.1 142.7 134.45 138.25

138.6 139.05 14718034 20464.88749

GMRINFRA

EQ 24-Jun-09

138.6 140 142.3 135.7 139.15

139.2 139.45 11490518 16022.96305

GMRINFRA

EQ 25-Jun-09

139.2 140.35

141.5 133.25 135.45

134.75

136.88 13960618 19108.99344

GMRINFRA

EQ 26-Jun-09

134.75 137 139.55 134.1 137.35

136.75

137.11 9372467 12850.29593

60

GMRINFRA

EQ 29-Jun-09

136.75 138.15

157.25 138.15 154.35

155.15

151.77 43432666 65915.85738

GMRINFRA

EQ 30-Jun-09

155.15 155.9 157.25 140.1 141.35

141.85

145.57 23533314 34256.29143

Interpretation:-

This analysis is useful to know where to buy and sell the options such as Call and Puts.

Open Price=167 On 1st June 09

Low Price=133.25 On 5th June 09

High Price=183.5 On 25th June 09

Close price=141 On 30th June 09

In the above graph I calculated Break Even point for GMRINFRA Stock for June Month.

61

Break Even Point(BEP) = (High Price + Low Price)/2

= (183.5+133.25)/2

= 158.37

Again I found margin of safety (MOS)

(1) Margin of safety (mos) = opening share value – BEP

=167-158

=9

So here margin of safety is Positive value. So here investor gets more profits and longs.

Investor can buy call options to get more profits. Investors should not go for put options at this

point

(2) Margin of safety (mos) =high share price –BEP

=183-158

=25

So here margin of safety is Positive value. So here investor gets more profits and longs. So

at this point investor can sell their Call options to get more profits.

(3) Margin of safety (mos) =Low share value – BEP

=133.25-158

=-24.75

So here margin of safety is negative. So here investor gets more losses and shorts. Investor

can sell their Put Option at this point to incur more profits.

62

GMRINFRA JUNE CALL OPTION TABLE(Strike Price=155) :-

Instrument Symbol Option Date Expiry Strike Price

Settle Price

OPTSTK GMRINFRA CA 1-Jun-09 25-Jun-09 155 29.4

OPTSTK GMRINFRA CA 2-Jun-09 25-Jun-09 155 27.05

OPTSTK GMRINFRA CA 3-Jun-09 25-Jun-09 155 26.2

OPTSTK GMRINFRA CA 4-Jun-09 25-Jun-09 155 29.3

OPTSTK GMRINFRA CA 5-Jun-09 25-Jun-09 155 23.55

OPTSTK GMRINFRA CA 8-Jun-09 25-Jun-09 155 15.85

OPTSTK GMRINFRA CA 9-Jun-09 25-Jun-09 155 19.45

OPTSTK GMRINFRA CA 10-Jun-09 25-Jun-09 155 16.15

OPTSTK GMRINFRA CA 11-Jun-09 25-Jun-09 155 12.4

OPTSTK GMRINFRA CA 12-Jun-09 25-Jun-09 155 12.95

OPTSTK GMRINFRA CA 15-Jun-09 25-Jun-09 155 6.1

OPTSTK GMRINFRA CA 16-Jun-09 25-Jun-09 155 7.05

OPTSTK GMRINFRA CA 17-Jun-09 25-Jun-09 155 3.75

OPTSTK GMRINFRA CA 18-Jun-09 25-Jun-09 155 2.85

OPTSTK GMRINFRA CA 19-Jun-09 25-Jun-09 155 3.6

OPTSTK GMRINFRA CA 22-Jun-09 25-Jun-09 155 0.55

OPTSTK GMRINFRA CA 23-Jun-09 25-Jun-09 155 0.15

63

OPTSTK GMRINFRA CA 24-Jun-09 25-Jun-09 155 0.05

OPTSTK GMRINFRA CA 25-Jun-09 25-Jun-09 155 0

OBSERVATIONS AND FINDINGS

JUNE CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of GMRINFRA that is 1250 those who buy for 155 paid 29.4 Premium Per Share.

Taken Spot price on 11th june 09 is 138.Such as Call option is sold on 11th June Spot price 138.00 Strike price 155.00 Amount -17 Net Loss -17*1250=-21250 Buyer Loss = Rs 21250(Net Amount)

64

Because it is negative it is OUT OF THE MONEY contract, hence buyer will get more Loss, incase spot price decreases buyer Loss also increases.

SELLERS PAY OFF:

It is OUT OF THE MONEY for the buyer, so it is IN THE MONEY for seller , hence his Profit increases.

Strike price 155.00

Spot price 138.00

Amount 17

Profit 17*1250=21250

Seller Profit = Rs 21250(Profit)

Because it is positive so it is IN THE MONEY, hence seller will get more profit, incase spot price increases in above strike price, seller get loss in premium level.

GMRINFRA JUNE PUT OPTION TABLE(Strike Price=155):-

Instrument Symbol Option Date Expiry Strike Price

Settle Price

OPTSTK GMRINFRA

PA 1-Jun-09 25-Jun-09 155 8.9

OPTSTK GMRINFRA

PA 2-Jun-09 25-Jun-09 155 8.75

OPTSTK GMRINFRA

PA 3-Jun-09 25-Jun-09 155 8.05

PTSTK GMRINFRA

PA 4-Jun-09 25-Jun-09 155 6.2

OPTSTK GMRINFRA

PA 5-Jun-09 25-Jun-09 155 7.65

65

OPTSTK GMRINFRA

PA 8-Jun-09 25-Jun-09 155 10.4

OPTSTK GMRINFRA

PA 9-Jun-09 25-Jun-09 155 7.6

OPTSTK GMRINFRA

PA 10-Jun-09 25-Jun-09 155 8.35

OPTSTK GMRINFRA

PA 11-Jun-09 25-Jun-09 155 9.8

OPTSTK GMRINFRA

PA 12-Jun-09 25-Jun-09 155 8.25

OPTSTK GMRINFRA

PA 15-Jun-09 25-Jun-09 155 13.3

OPTSTK GMRINFRA

PA 16-Jun-09 25-Jun-09 155 10.55

OPTSTK GMRINFRA

PA 17-Jun-09 25-Jun-09 155 14.65

OPTSTK GMRINFRA

PA 18-Jun-09 25-Jun-09 155 14.6

OPTSTK GMRINFRA

PA 19-Jun-09 25-Jun-09 155 11.2

OPTSTK GMRINFRA

PA 22-Jun-09 25-Jun-09 155 15.75

OPTSTK GMRINFRA

PA 23-Jun-09 25-Jun-09 155 16.55

OPTSTK GMRINFRA

PA 24-Jun-09 25-Jun-09 155 15.8

OPTSTK GMRINFRA

PA 25-Jun-09 25-Jun-09 155 0

66

OBSERVATIONS AND FINDINGS

JUNE PUT OPTION

BUYERS PAY OFF:

Those who have purchase put option at a strike price 135, the premium payable is 8.9.

On the expiry date the spot market price enclosed at 155.95. Strike Price 155 Spot price 139.2 Amount 15.8 Premium Paid(-) 8.9 Profit 6.9*1250=8625 So, he got profit up to Rs 8625

Because it is positive, IN THE MONEY contract, hence buyer gets profit, incase spot price increases above strike price, buyer get loss in premium level.

67

SELLERS PAY OFF:

As seller is entitled only for premium so,if buyer is in profit and also seller has to get total loss.

Spot Price 139.2 Strike Price 155 Amount -15.8 Premium received (+) 8.9 Loss -6.9*1250=-8625

Already Premium Received So, he can get Loss up to Rs 8625

Because it is Loss, OUT OF THE MONEY Contract, hence seller gets more Loss , incase Spot price increases above strike price seller can get profit in premium.

GMRINFRA JUNE FUTURE ANALYSIS:-

The Objective of this analysis is to evaluate the profit/loss position futures . This analysis is based on sample data taken of GMR INFRA scrip. This analysis considered the May Contract on GMRINFRA. The lot size of GMRINFRA is 1250,the time period in which this analysis done is from 1-06-2009 to 25-06-09

Instrument

Symbol Date Expiry Open

High

Low

Close LTP Settle Price

No. of contracts

Turnover in lacs

Open Int

FUTSTK

GMRINFRA

1-Jun-09

25-Jun-09

167.8

177.4

162

176.05

175.95 176.05

9497 81453.39 23635000

FUTSTK

GMRINFRA

2-Jun-09

25-Jun-09

177.9

178.75

168.2

173.5

173.05 173.5 6734 58547.98 22640000

FUTSTK

GMRINFRA

3-Jun-09

25-Jun-09

175.3

177.75

167.3

173.4

172.35 173.4 5241 45511.33 22395000

FUTSTK

GMRINFRA

4-Jun-09

25-Jun-

17 10. 17 178. 178.5 178.3 7396 65900.83 22000000

68

09 1.9 5 1.9 3

FUTSTK

GMRINFRA

5-Jun-09

25-Jun-09

181

183.65

170

171.35

170.75 171.35

6208 55215.25 22280000

FUTSTK

GMRINFRA

8-Jun-09

25-Jun-09

174

174 155.1

158.3

156 158.3 5362 44171.44 21655000

FUTSTK

GMRINFRA

9-Jun-09

25-Jun-09

157

168.3

148.65

166.05

166.8 166.05

7813 62709.57 25005000

FUTSTK

GMRINFRA

10-Jun-09

25-Jun-09

168

170.75

157.15

162.05

162.95 162.05

4651 38265.41 25320000

FUTSTK

GMRINFRA

11-Jun-09

25-Jun-09

163.1

164.25

155.5

157.55

157.6 157.55

4445 35463.05 26475000

FUTSTK

GMRINFRA

12-Jun-09

25-Jun-09

159

163.65

152.15

159.4

159.25 159.4 11438 90979.06 30380000

FUTSTK

GMRINFRA

15-Jun-09

25-Jun-09

157.4

157.4

145.2

147.35

147.5 147.35

5372 40518.95 29600000

FUTSTK

GMRINFRA

16-Jun-09

25-Jun-09

143

153.35

142.25

151.55

150.7 151.55

4175 31211.01 29440000

FUTSTK

GMRINFRA

17-Jun-09

25-Jun-09

150.7

154.15

140.35

143.1

143.15 143.1 4368 32499.43 28370000

FUTSTK

GMRINFRA

18-Jun-09

25-Jun-09

143

146.45

136.65

142.8

144 142.8 5375 38053.13 25490000

FUTSTK

GMRINFRA

19-Jun-

25-Jun-

145

148.4

141.2

146.8

147.6 146.8 4437 32290.93 23350000

69

09 09 5

FUTSTK

GMRINFRA

22-Jun-09

25-Jun-09

148.5

150.55

138.8

139.9

139.3 139.9 5283 38225.04 19820000

FUTSTK

GMRINFRA

23-Jun-09

25-Jun-09

136.9

142.8

135.1

139.35

138.8 139.35

5754 40174.64 16190000

FUTSTK

GMRINFRA

24-Jun-09

25-Jun-09

140.3

142.7

136

139.75

139.65 139.75

5100 35670.08 10010000

FUTSTK

GMRINFRA

25-Jun-09

25-Jun-09

141.3

141.8

133.4

134.7

134.7 134.75

3570 24630.91 3890000

1-Jun-09

3-Jun-09

5-Jun-09

7-Jun-09

9-Jun-09

11-Jun-09

13-Jun-09

15-Jun-09

17-Jun-09

19-Jun-09

21-Jun-09

23-Jun-09

25-Jun-09

0

40

80

120

160

200

GMR(June Futures)

Average GMR PriceFuture Price

Date

Price

Future Market

BUYER SELLER

70

12/06/09(buying) 159.4 159.4

26/06/09(Closing Period) 134.7 134.7

Loss = 24.7 Profit = 24.7

Loss 24.7*1250=30875 Profit 24.7*1250=30875

Because buyer Future price will decreases so, loss also increases. Seller Future price decreases so he can get profit. Incase seller Future will increases, he can get Loss.

The closing Price of GMRINFRA at the end of contract period is 134.7 and this is considered as settlement price.

PUNJAB NATIONAL BANK

71

5.2 PUNJAB NATIONAL BANK

5.2.1 PROFILE

With over 38 million satisfied customers and 4668 offices, PNB has continued to retain its leadership position among the nationalized banks. The bank enjoys strong fundamentals, large franchise value and good brand image. Besides being ranked as one of India's top service brands, PNB has remained fully committed to its guiding principles of sound and prudent banking. Apart from offering banking products, the bank has also entered the credit card & debit card business; bullion business; life and non-life insurance business; Gold coins & asset management business, etc. Since its humble beginning in 1895 with the distinction of being the first Indian bank to have been started with Indian capital, PNB has achieved significant growth in business which at the end of March 2009 amounted to Rs 3,64,463 crore. Today, with assets of more than Rs 2,46,900 crore, PNB is ranked as the 3rd largest bank in the country (after SBI and ICICI Bank) and has the 2nd largest network of branches (4668 including 238 extension counters and 3 overseas offices).During the FY 2008-09, with 39% share of low cost deposits, the bank achieved a net profit of Rs 3,091 crore, maintaining its number ONE position amongst nationalized banks. Bank has a strong capital base with capital adequacy ratio as per Basel II at 14.03% with Tier I and Tier II capital ratio at 8.98% and 5.05% respectively as on March’09. As on March’09, the Bank has the Gross and Net NPA ratio of only 1.77% and 0.17% respectively. During the FY 2008-09, its’ ratio of priority sector credit to adjusted net bank credit at 41.53% & agriculture credit to adjusted net bank credit at 19.72% was also higher than the respective national goals of 40% & 18%. PNB has always looked at technology as a key facilitator to provide better customer service and ensured that its ‘IT strategy’ follows the ‘Business strategy’ so as to arrive at “Best Fit”. The bank has made rapid strides in this direction. Alongwith the achievement of 100% branch computerization, one of the major achievements of the Bank is covering all the branches

72

of the Bank under Core Banking Solution (CBS), thus covering 100% of it’s business and providing ‘Anytime Anywhere’ banking facility to all customers including customers of more than 2000 rural branches. The bank has also been offering Internet banking services to the customers of CBS branches like booking of tickets, payment of bills of utilities, purchase of airline tickets etc

Towards developing a cost effective alternative channels of delivery, the bank with more than 2150 ATMs has the largest ATM network amongst Nationalized Banks. With the help of advanced technology, the Bank has been a frontrunner in the industry so far as the initiatives for Financial Inclusion is concerned. With it’s policy of inclusive growth in the Indo-Gangetic belt, the Bank’s mission is “Banking for Unbanked”. The Bank has launched a drive for biometric smart card based technology enabled Financial Inclusion with the help of Business Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile customer. The BC/BF will address the outreach issue while technology will provide cost effective and transparent services.

The Bank has started several innovative initiatives for marginal groups like rickshaw pullers, vegetable vendors, diary farmers, construction workers, etc. The Bank has already achieved 100% financial inclusion in 21,408 villages. Backed by strong domestic performance, the bank is planning to realize its global aspirations. In order to increase its international presence, the Bank continues its selective foray in international markets with presence in Hongkong, Dubai, Kazakhstan, UK, Shanghai, Singapore, Kabul and Norway. A second branch in Hongkong at Kowloon was opened in the first week of April’09. Bank is also in the process of establishing its presence in China, Bhutan, DIFC Dubai, Canada and Singapore. The bank also has a joint venture with Everest Bank Ltd. (EBL), Nepal. Under the long term vision, Bank proposes to start its operation in Fiji Island, Australia and Indonesia. Bank continues with its goal to become a household brand with global expertise. Amongst Top 1000 Banks in the World, ‘The Banker’ listed PNB at 250th place. Further, PNB is at the 1166th position among 48 Indian firms making it to a list of the world’s biggest companies compiled by the US magazine ‘Forbes’.

Financial Performance:

Punjab National Bank continues to maintain its frontline position in the Indian banking industry. In particular, the bank has retained its NUMBER ONE position among the nationalized banks in terms of number of branches, Deposit, Advances, total Business, operating and net profit in the year 2008-09. The impressive operational and financial performance has been brought about by Bank’s focus on customer based business with thrust on SME, Agriculture, more inclusive approach to banking; better asset liability management; improved margin management, thrust on recovery and increased efficiency in core operations of the Bank. The performance highlights of the bank in terms of business and profit are shown below:

73

Parameters Mar'07 Mar'08 Mar'09 CRAR

Operating Profit* 3617 4006 5744 26.02

Net Profit* 1540 2049 3091 41.67

Deposit 139860 166457 209760 22.47

Advance 96597 119502 154703 26.55

Total Business 236456 285959 364463 24.15

74

75

76

77

78

79

80

5.2.2 PNB MAY MONTH ANALYSIS

PNB MAY EQUITY TABLE:-

Symbol

Series

Date Prev Close

Open Price

High Price

Low Price

Last Price

Close Price

Average Price

Total Traded Quantity

Turnover in Lacs

PNB EQ 4-May-09

477.9 494.4 506.5 485.55

504 503.3 497.77 2609220 12987.88804

PNB EQ 5-May-09

503.3 509.9 520 492.4

502.5

503.85

506.74 1981817 10042.75586

PNB EQ 6-May-09

503.85

506 519.8 503.65

506.55

506.1 510.51 1732069 8842.385504

PNB EQ 7-May-09

506.1 510 530 508.35

529.3

524.75

520.17 1153700 6001.256074

PNB EQ 8-May-09

524.75

520.2 532 512.1

528 528.75

522.01 1181648 6168.310954

PNB EQ 11-May-09

528.75

526.2 534.7 512 521 522.15

522.44 1209101 6316.875369

PNB EQ 12-May-09

522.15

522.15

553.5 515.1

550.45

550.1 539.31 2309184 12453.74827

PNB EQ 13-May-09

550.1 550.3 574.5 545.35

565 562.75

562.07 2296752 12909.26984

PNB EQ 14-May-09

562.75

555 571.55

540.55

563 562.25

563 2503026 14092.03063

PNB EQ 15-May-09

562.25

565 589 561.6

577 574.75

572.53 2465576 14116.18189

PNB EQ 18-May-09

574.75

620 680 620 665 662.8 651.83 33068 215.548411

PNB EQ 19-May-09

662.8 700 725 665 695 689.4 694.14 3124143 21685.98096

PNB EQ 20-May-09

689.4 689 708.5 666.15

679 676.65

689.33 1865804 12861.63709

PNB EQ 21-May-09

676.65

689 697 663.1

665 668.75

685.57 1894595 12988.77185

PNB EQ 22-May-09

668.75

670 683 645.6

659.85

663.15

665.84 1137015 7570.647807

PNB EQ 25-May-09

663.15

671.5 671.5 637.8

643.05

642.85

647.54 1350731 8746.542945

PNB EQ 26-May-09

658.7 625.7 668.9 625.7

668.1

664.3 661.5 597170 3950.253605

PNB EQ 27-May-09

642.85

643 669 635 636 639.65

649.99 679608 4417.400963

PNB EQ 28-May-09

639.65

661 666 650 657 658.7 659.28 745123 4912.4816

PNB EQ 29-May-09

664.3 670.1 676 662 670.1

670.8 669.64 690021 4620.679415

81

Interpretation:-

This analysis is useful to know where to buy and sell the options such as Call and Puts.

Open Price=494 On 4th May 09

Low Price=485 On 4th May 09

High Price=725 On 19nd May 09

Close price=670 On 29th May 09

In the above graph I calculate Breakeven point for GMRINFRA Stock.

Break Even Point(BEP) = (High Price + Low Price)/2

= (725+485)/2

= 605

Again I found margin of safety (MOS)

(1) Margin of safety (mos) = opening share value – BEP

=494-605

82

=-111

So here margin of safety is negative value. So here investor gets more Loss and shorts. Here

investor can buy put options to get more profits. Investors should not go for call options at this

point

(2) Margin of safety (mos) =high share value –BEP

=725-605

=120

So here margin of safety is Positive value. So here investor gets more profits and longs. So

at this point investor can sell their Call options to get more profis.

(3) Margin of safety (mos) =LOW share value – BEP

=485-605

=-120

So here margin of safety is negative. so here investor gets more losses and more shorts.

Investor can sell their Put Option at this point to incur more profits.

83

PNB MAY CALL OPTION TABLE(Strike Price=580):-

Instrument Symbol Option Date Expiry Strike Price Settle PriceOPTSTK PNB CA 4-May-09 28-May-09 580 19.15OPTSTK PNB CA 5-May-09 28-May-09 580 17.35OPTSTK PNB CA 6-May-09 28-May-09 580 16.1OPTSTK PNB CA 7-May-09 28-May-09 580 20.7OPTSTK PNB CA 8-May-09 28-May-09 580 20.1OPTSTK PNB CA 11-May-09 28-May-09 580 14.45OPTSTK PNB CA 12-May-09 28-May-09 580 23.85OPTSTK PNB CA 13-May-09 28-May-09 580 27.45OPTSTK PNB CA 14-May-09 28-May-09 580 25.05OPTSTK PNB CA 15-May-09 28-May-09 580 22.5OPTSTK PNB CA 18-May-09 28-May-09 580 89.7OPTSTK PNB CA 19-May-09 28-May-09 580 115.5OPTSTK PNB CA 20-May-09 28-May-09 580 102.5OPTSTK PNB CA 21-May-09 28-May-09 580 93.85OPTSTK PNB CA 22-May-09 28-May-09 580 87.25OPTSTK PNB CA 25-May-09 28-May-09 580 65OPTSTK PNB CA 26-May-09 28-May-09 580 59.75OPTSTK PNB CA 27-May-09 28-May-09 580 78.8OPTSTK PNB CA 28-May-09 28-May-09 580 0

84

OBSERVATIONS AND FINDINGS

MAY CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of PNB that is 300 those who buy for 580 paid 19.15 Premium Per Share.

Settlement Price is 639.65 Spot price 639.65 Strike price 580.00 Amount 59.65 Premium Paid (-) 19.15 Net Profit 40.5*300=12150 Buyer Profit = Rs 12150(Net Amount)

Because it is positive it is IN THE MONEY contract, hence buyer will get more profit, incase spot price increase buyer profit also increases.

SELLERS PAY OFF:

It is in the money for the buyer, so it is n out of the money for seller , hence his loss is also increases.

Strike price 580.00

Spot price 639.65

Amount -59.65

Premium Received 19.15

Loss -40.5*300=-12150

Seller loss = Rs -12150(Loss)

Because it is negative it is out of the money, hence seller will get more loss, incase spot price decreases in below strike price, seller get profit in premium level.

85

PNB MAY PUT OPTION TABLE(Strike Price=580):-

Instrument Symbol Option Date Expiry Strike Price Close Settle PriceOPTSTK PNB PA 4-May-09 28-May-09 580 84.9 94.1

OPTSTK PNB PA 5-May-09 28-May-09 580 84.9 91.75OPTSTK PNB PA 6-May-09 28-May-09 580 84.9 88.55OPTSTK PNB PA 7-May-09 28-May-09 580 84.9 74.6OPTSTK PNB PA 8-May-09 28-May-09 580 84.9 70.05OPTSTK PNB PA 11-May-09 28-May-09 580 84.9 71.2OPTSTK PNB PA 12-May-09 28-May-09 580 84.9 52.75OPTSTK PNB PA 13-May-09 28-May-09 580 84.9 43.7OPTSTK PNB PA 14-May-09 28-May-09 580 84.9 41.85OPTSTK PNB PA 15-May-09 28-May-09 580 84.9 33.55OPTSTK PNB PA 18-May-09 28-May-09 580 84.9 11.3OPTSTK PNB PA 19-May-09 28-May-09 580 84.9 5.5OPTSTK PNB PA 20-May-09 28-May-09 580 84.9 5.35OPTSTK PNB PA 21-May-09 28-May-09 580 84.9 4.65OPTSTK PNB PA 22-May-09 28-May-09 580 84.9 3.75OPTSTK PNB PA 25-May-09 28-May-09 580 84.9 2OPTSTK PNB PA 26-May-09 28-May-09 580 84.9 0.9OPTSTK PNB PA 27-May-09 28-May-09 580 84.9 0.05OPTSTK PNB PA 28-May-09 28-May-09 580 84.9 0

86

OBSERVATIONS AND FINDINGS

MAY PUT OPTION

BUYERS PAY OFF:

Those who have purchase put option at a strike price 580, the premium payable is 94.1

On 18th May 09 the spot price enclosed is 662.8 .here this put option sold on 18th may 09. Strike Price 580 Spot price 662.8 Net Pay Off -82.8*300=-24840 Already Premium paid is 94.1 So, he get loss up to Rs 24840

Because it is negative, out of the money contract, hence buyer gets more loss, incase spot price decrease in below strike price, buyer get profit in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if he is in profit and also seller has to get total profit.

Spot Price 662.8 Strike Price 580 Net Pay off 82.8*300=24840

Already Premium Received 94.1So, he can get profit up to Rs 24840

Because it is positive, in the money Contract, hence seller gets more profit, incase Spot price decrease in below strike price seller can get loss in premium.

87

4-May

-09

6-May

-09

8-May

-09

10-May

-09

12-May

-09

14-May

-09

16-May

-09

18-May

-09

20-May

-09

22-May

-09

24-May

-09

26-May

-090

100

200

300

400

500

600

700

PNB(May Options) strike Price=580

Average PNB PriceCALL pricePut price

Date

Price

SSS

Punjab national bank minting money On 12th may 09 so its volumes are increasing. On 12th may 09 Punjab touched an intraday high of Rs 549.50 and an intraday low of Rs 508.40. At 1:45 pm, the share was quoting at Rs 547.20, up Rs 28.10, or 5.41%. So from may 12th Onwards there is a drastic increase in Share price of PNB. So that the call option values also starts increasing and put option values decreased from 12th may onwards.

On 12th May there is drastic increase in total turnover in lacs from 6316.87 on 11th May 09 to 12456.74 on 12th May 09. Traded quantity increased from 12,09,101 on may 11th 09 to 23,09,184 on 12th may 09. So the share price of PNB started increasing from 12th may 09.

On 20th may 09 PNB announced it will disinvest 26% stake in PNB Housing Finance to Dawnay Day. So the share price decreased from 20th may onwards. Then call option values started decreasing, put options values started increasing.

88

PNB MAY FUTURES:-

Instrument

Symbol

Date Expiry Open

High Low Close LTP Settle Price

No. of contracts

Turnover in lacs

Open Int

FUTSTK

PNB 4-May-09

28-May-09

484.9

502.9 481.5

498.85

497.15

498.85 2947 8725.53 1602000

FUTSTK

PNB 5-May-09

28-May-09

499 518 489.3

499.75

500 499.75 3119 9415.69 1594800

FUTSTK

PNB 6-May-09

28-May-09

503.3

514.45

498 502.75

504.7

502.75 3276 9949.45 1744200

FUTSTK

PNB 7-May-09

28-May-09

509.85

523 507.25

519.85

522.25

519.85 2423 7491.64 1746000

FUTSTK

PNB 8-May-09

28-May-09

523.8

527.45

506.5

523.2 525 523.2 3050 9465.21 1978800

FUTSTK

PNB 11-May-09

28-May-09

525.5

528.6 505.4

515.45

516.4

515.45 2597 8045.32 2088600

FUTSTK

PNB 12-May-09

28-May-09

515.8

549.95

512.2

547.25

547.3

547.25 3899 12452.47 2382600

FUTSTK

PNB 13-May-09

28-May-09

548 568.8 542 554.75

551.05

554.75 3816 12752.89 2509800

FUTSTK

PNB 14-May-09

28-May-09

543 563.8 536 556.7 556.5

556.7 3215 10710.8 2779200

FUTSTK

PNB 15-May-09

28-May-09

558.1

582.9 555.2

572.95

575.7

572.95 3595 12325.3 2811000

FUTSTK

PNB 18-May-09

28-May-09

658.9

687 658.9

682.5 685.05

682.5 38 154.26 2803800

FUTSTK

PNB 19-May-09

28-May-09

719.7

747 674 689.3 686.2

689.3 4601 19195.66 2431800

FUTSTK

PNB 20-May-09

28-May-09

680 710 670.2

680.5 683.1

680.5 2683 11095.09 2452200

FUTSTK

PNB 21-May-09

28-May-09

680 698 663.2

668.4 663.2

668.4 3335 13711.66 2196600

FUTSTK

PNB 22-May-09

28-May-09

655.25

680.7 647.25

663.1 660.8

663.1 3158 12590.17 1813200

FUTSTK

PNB 25-May-

28-May-09

664 666 638.15

644.05

642.1

644.05 3350 13020.47 1587000

89

09FUTSTK

PNB 26-May-09

28-May-09

648 659.5 630 634.4 633.25

634.4 2059 8012.99 1307400

FUTSTK

PNB 27-May-09

28-May-09

648 664 645.3

661.5 660 661.5 1941 7661.76 1109400

FUTSTK

PNB 28-May-09

28-May-09

661 668.4 653.6

664.5 664.5

664.3 1999 7934.09 663000

4-May

-09

6-May

-09

8-May

-09

10-May

-09

12-May

-09

14-May

-09

16-May

-09

18-May

-09

20-May

-09

22-May

-09

24-May

-09

26-May

-09

28-May

-090

100200300400500600700800

PNB(May FUTURES) Strike Price=580

Average PNB PriceFuture Price

Date

Price

Future Market

BUYER SELLER

12/05/09(buying) 547.25 547.25

28/05/09(Closing Period) 664.5 664.5

Profit = 117.25 Loss =117.25

Profit 145.2*300=35175 Loss 117.25*300=35175

Because buyer Future price will increase so, profit also increases.Seller Future price also increases so he can get loss. Incase seller Future will decreases, he can get profit.

90

The closing Price of PNB at the end of contract period is 664.5 and this is considered as settlement price.

5.2.3 PNB JUNE MONTH ANALYSIS

PNB JUNE EQUITY TABLE:-

Symbol

Series

Date Prev Close

Open Price

High Price

Low Price

Last Price

Close Price

Average Price

PNB EQ 1-Jun-09 670.8 684.4 684.4 658.55 667 663.5 668.62

PNB EQ 2-Jun-09 663.5 674 674.4 633.3 648.3 646.3 648.03

PNB EQ 3-Jun-09 646.3 650.1 664.45 641 658 657.2 651.67

PNB EQ 4-Jun-09 657.2 649.8 665 623.35 660.9 661.65 647.62

PNB EQ 5-Jun-09 661.65 666 670 648.3 652.05 654.25 661

PNB EQ 8-Jun-09 654.25 650 659.85 595.35 598 606.45 618.81

PNB EQ 9-Jun-09 606.45 601.05 624.9 590.1 615.1 610.85 612.97

PNB EQ 10-Jun-09 615.1 612 638.5 612 632.1 636 628.5

PNB EQ 11-Jun-09 636 638 638 606 614 612.65 615.23

PNB EQ 12-Jun-09 612.65 614 632 590.2 592.9 593 602.32

PNB EQ 15-Jun-09 593 583 617.9 583 613.95 611.4 606.93

PNB EQ 16-Jun-09 611.4 605 634.85 598.2 629.8 630.85 625.96

PNB EQ 17-Jun-09 630.85 634.85 647 605 612 600 633.88

PNB EQ 18-Jun-09 600 618.7 640 612 619 617.2 627.16

PNB EQ 19-Jun-09 617.2 639.7 645.85 624.05 645 642.05 634.12

PNB EQ 22-Jun-09 642.05 646.85 659.8 645 645 648.7 652.44

PNB EQ 23-Jun-09 648.7 635 647 620.3 621 625.15 630.16

PNB EQ 24-Jun-09 625.15 628 631.8 620.1 623 623.7 626.18

PNB EQ 25-Jun-09 623.7 640 647.7 626 631 631.45 633.5

PNB EQ 26-Jun-09 631.45 633.15 667 620.7 649 655.2 646.17

PNB EQ 29-Jun-09 655.2 655.55 689.9 655 676.95 680.05 675.28

PNB EQ 30-Jun-09 680.05 683 694 673.5 679 677.75 684.69

91

Interpretation:-

This analysis is useful to know where to buy and sell the options such as Call and Puts.

Open Price=684 On 1st June 09

Low Price=583 On 15th June 09

High Price= 694 On 30th June 09

Close price=677 On 30th June 09

In the above graph I calculated Break Even point for GMRINFRA Stock for June Month.

Break Even Point(BEP) = (High Price + Low Price)/2

= (694+583)/2

= 638

92

Again I found margin of safety (MOS)

(1) Margin of safety (mos) = opening share value – BEP

=684-638

=46

So here margin of safety is Positive value. So here investor gets more profits and longs.

(2) Margin of safety (mos) =high share price –BEP

=694-638

=56

So here margin of safety is Positive value. So here investor gets more profits and longs. So

at this point investor can sell their Call options to get more profits.

(3) Margin of safety (mos) =Low share value – BEP

=583-638

=-55

So here margin of safety is negative. So here investor gets more losses and shorts. Investor

can sell their Put Option at this point to incur more profits.

93

PNB JUNE PUT OPTION(Strike Price=640):-

Instrument

Symbol Option Date Expiry Strike Price

Settle PriceOPTSTK PNB PA 1-Jun-09 25-Jun-09 640 37.85OPTSTK PNB PA 2-Jun-09 25-Jun-09 640 43.1OPTSTK PNB PA 3-Jun-09 25-Jun-09 640 36.4OPTSTK PNB PA 4-Jun-09 25-Jun-09 640 33.7OPTSTK PNB PA 5-Jun-09 25-Jun-09 640 34.45OPTSTK PNB PA 8-Jun-09 25-Jun-09 640 58.95OPTSTK PNB PA 9-Jun-09 25-Jun-09 640 54.1OPTSTK PNB PA 10-Jun-09 25-Jun-09 640 41.05OPTSTK PNB PA 11-Jun-09 25-Jun-09 640 50.25OPTSTK PNB PA 12-Jun-09 25-Jun-09 640 61.4OPTSTK PNB PA 15-Jun-09 25-Jun-09 640 45.5OPTSTK PNB PA 16-Jun-09 25-Jun-09 640 32.6OPTSTK PNB PA 17-Jun-09 25-Jun-09 640 39.95OPTSTK PNB PA 18-Jun-09 25-Jun-09 640 36.25OPTSTK PNB PA 19-Jun-09 25-Jun-09 640 21.1OPTSTK PNB PA 22-Jun-09 25-Jun-09 640 11.4OPTSTK PNB PA 23-Jun-09 25-Jun-09 640 21.15OPTSTK PNB PA 24-Jun-09 25-Jun-09 640 19OPTSTK PNB PA 25-Jun-09 25-Jun-09 640 0

94

OBSERVATIONS AND FINDINGS

JUNE PUT OPTION

BUYERS PAY OFF:

Those who have purchase put option at a strike price 640, the premium payable is 37.85.

On 17th spot market price enclosed at 636 Strike Price 640.00 Spot price 600.05 Amount 39.95 Premium Paid(-) 37.85 Profit 2.1*300=630 So, he got profit up to Rs 630

Because it is positive, IN THE MONEY contract, hence buyer gets profit, incase spot price increases above strike price, buyer get loss in premium level.

95

SELLERS PAY OFF:

As seller is entitled only for premium so,if buyer is in profit and also seller has to get total loss.

Spot Price 600.05 Strike Price 640.00 Amount -39.95 Premium received (+) 37.85 Loss -2.1*300=--630

Already Premium Received So, he can get Loss up to Rs 630

Because it is Loss, OUT OF THE MONEY Contract, hence seller gets more Loss , incase Spot price increases above strike price seller can get profit in premium.

PNB JUNE CALL OPTION(Strike Price=640):-

Instrument Symbol Option Date Expiry Strike Settle PriceOPTSTK PNB CA 1-Jun-09 25-Jun-09 640 63OPTSTK PNB CA 2-Jun-09 25-Jun-09 640 51OPTSTK PNB CA 3-Jun-09 25-Jun-09 640 55.2OPTSTK PNB CA 4-Jun-09 25-Jun-09 640 56.85OPTSTK PNB CA 5-Jun-09 25-Jun-09 640 50.15OPTSTK PNB CA 8-Jun-09 25-Jun-09 640 26.6OPTSTK PNB CA 9-Jun-09 25-Jun-09 640 26.1OPTSTK PNB CA 10-Jun-09 25-Jun-09 640 14OPTSTK PNB CA 11-Jun-09 25-Jun-09 640 23.9OPTSTK PNB CA 12-Jun-09 25-Jun-09 640 15.3OPTSTK PNB CA 15-Jun-09 25-Jun-09 640 17.6OPTSTK PNB CA 16-Jun-09 25-Jun-09 640 24.05OPTSTK PNB CA 17-Jun-09 25-Jun-09 640 15.35OPTSTK PNB CA 18-Jun-09 25-Jun-09 640 13.95OPTSTK PNB CA 19-Jun-09 25-Jun-09 640 23.55OPTSTK PNB CA 22-Jun-09 25-Jun-09 640 20.3OPTSTK PNB CA 23-Jun-09 25-Jun-09 640 6.45OPTSTK PNB CA 24-Jun-09 25-Jun-09 640 2.75OPTSTK PNB CA 25-Jun-09 25-Jun-09 640 0

96

OBSERVATIONS AND FINDINGS

JUNE CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of PNB that is 300 those who buy for 640 paid 51 Premium Per Share.

Taken Spot price on 9th june 09 is 615.1.Such as Call option is sold on 9th June Spot price 615.1 Strike price 640.0 Amount -24.9 Net Loss -24.9*300=-7470 Buyer Loss = Rs 7470(Net Amount)

Because it is negative it is OUT OF THE MONEY contract, hence buyer will get more Loss, incase spot price decreases buyer Loss also increases.

97

SELLERS PAY OFF:

It is OUT OF THE MONEY for the buyer, so it is IN THE MONEY for seller , hence his Profit increases.

Strike price 640.00

Spot price 615.1

Amount 24.9

Profit 24.9*300=7470

Seller Profit = Rs 7470(Profit)

Because it is positive so it is IN THE MONEY, hence seller will get more profit, incase spot price increases in above strike price, seller get loss in premium level.

1-Ju

n-09

2-Ju

n-09

3-Ju

n-09

4-Ju

n-09

5-Ju

n-09

6-Ju

n-09

7-Ju

n-09

8-Ju

n-09

9-Ju

n-09

10-Ju

n-09

11-Ju

n-09

12-Ju

n-09

13-Ju

n-09

14-Ju

n-09

15-Ju

n-09

16-Ju

n-09

17-Ju

n-09

18-Ju

n-09

19-Ju

n-09

20-Ju

n-09

21-Ju

n-09

22-Ju

n-09

23-Ju

n-09

24-Ju

n-09

0100200300400500600700800

PNB June Options(strike Price=640)

Underlying Pricecall PricePut Price

Date

Stoc

k Pr

ice

PNB declines 6.7% On June 8th 09, PNB touched an intraday high of Rs 662 and an intraday low of Rs 608.15. At 2:59 pm, the share was quoting at Rs 609.05, down Rs 43.65, or 6.69%. It was trading with volumes of 124,992 shares. On 6th June the share closed down 0.90% or Rs 5.90 at Rs 652.70. so that put option started increasing and call option tend to decrease from 6th June 09 onwards.

98

PNB was the top gainer at the Nifty on June 18th 09 so it touched an intraday high of Rs 639 and an intraday low of Rs 612. The share was quoting at Rs 638.35, up Rs 23.50, or 3.82%. So that the share value increased on June 18th 09 hence call price also rise and put option prices tend to decrease.

PNB Minting money on 15th June 09 so it touched an intraday high of Rs 617.90 and an intraday low of Rs 583. At 2:22 p.m the share was quoting at Rs 613.50, up Rs 20.50, or 3.46%.  It was trading with volumes of 635,040 shares. On 11th June the share closed down 3.21% or Rs 19.65 at Rs 593.

PNB JUNE FUTURES:-

Instrument Symbol Date Expiry Open High Low Close LTP Settle Price

FUTSTK PNB 1-Jun-09 25-Jun-09 660 663 641.15 646.6 650.7 646.6

FUTSTK PNB 2-Jun-09 25-Jun-09 650.95 653 609.85 625.65 629 625.65

FUTSTK PNB 3-Jun-09 25-Jun-09 632.6 638.8 618 632.05 630.7 632.05

FUTSTK PNB 4-Jun-09 25-Jun-09 630 657.95 625.15 655.3 653.5 655.3

FUTSTK PNB 5-Jun-09 25-Jun-09 659.95 664.8 649.35 654.15 653.35 654.15

FUTSTK PNB 8-Jun-09 25-Jun-09 651.4 652.1 595 605.8 595 605.8

FUTSTK PNB 9-Jun-09 25-Jun-09 595 624.75 588.5 613.2 618.8 613.2

FUTSTK PNB 10-Jun-09 25-Jun-09 623.6 638.75 621 633.5 634.85 633.5

FUTSTK PNB 11-Jun-09 25-Jun-09 634 636.85 602.55 612 610.1 612

FUTSTK PNB 12-Jun-09 25-Jun-09 613.3 619.4 590.05 593.6 594.4 593.6

FUTSTK PNB 15-Jun-09 25-Jun-09 589.2 616.25 582.6 610.1 614 610.1

99

FUTSTK PNB 16-Jun-09 25-Jun-09 602 633 602 630.25 627.85 630.25

FUTSTK PNB 17-Jun-09 25-Jun-09 632 643.5 603.1 607.95 606 607.95

FUTSTK PNB 18-Jun-09 25-Jun-09 608 635.75 608 616.85 619 616.85

FUTSTK PNB 19-Jun-09 25-Jun-09 624 647.45 621.4 643.65 646.4 643.65

FUTSTK PNB 22-Jun-09 25-Jun-09 650.95 659 643 646.6 643.5 646.6

FUTSTK PNB 23-Jun-09 25-Jun-09 633.55 647 619.1 626.75 622 626.75

FUTSTK PNB 24-Jun-09 25-Jun-09 627.1 631.85 621 625.35 626.25 625.35

FUTSTK PNB 25-Jun-09 25-Jun-09 630.35 643 626.6 631.75 631.75 631.45

1-Jun-09

3-Jun-09

5-Jun-09

7-Jun-09

9-Jun-09

11-Jun-09

13-Jun-09

15-Jun-09

17-Jun-09

19-Jun-09

21-Jun-09

23-Jun-09

25-Jun-09

540

560

580

600

620

640

660

680

PNB(June Futures)

Underlying PriceFuture Price

Date

Stock Price

Future Market

BUYER SELLER

100

12/06/09(buying) 593.6 593.6

25/06/09(Closing Period) 631.45 631.45

Profit = 37.85 Loss = 37.25

Profit 37.05*300=11355 Loss 37.25*300=11355

Because buyer Future price will increase so, profit also increases. Seller Future price also increases so he can get loss. Incase seller Future will decreases, he can get profit.

The closing Price of PNB at the end of contract period is 630.35 and this is considered as settlement price.

101

HINDUSTAN UNILEVER

5.3 Hindustan Unilever:-

5.3.1 Introduction

Hindustan Unilever Limited (HUL) is India's largest fast moving consumer goods company, with leadership in Home & Personal Care Products and Foods & Beverages. HUL's brands, spread across 20 distinct consumer categories, touch the lives of two out of three Indians. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of Rs.13,718 crores.

The mission that inspires HUL's over 15,000 employees is to "add vitality to life". With 35 Power Brands, HUL meets everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life.

It is a mission HUL shares with its parent company, Unilever, which holds 52.10% of the equity. A Fortune 500 transnational, Unilever sells Foods and Home and Personal Care brands in about 100 countries worldwide.

           

Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life.

102

Brands

     

Lux   BreezeLifebuoy   DoveLiril   PearsHamam   Rexona

     Surf Excel     Fair & Lovely  Rin     Pond's  Wheel     Vaseline  Sunlight     Aviance  

     Sunsilk Naturals     Pepsodent  Clinic     Closeup  

     Axe     Lakme  Rexona    

Ayush       

     

     Brooke Bond   Brooke Bond Bru    Lipton          

     Kissan   Kwality Wall's    AnnapurnaKnorr

 

   

103

104

105

 

Merging company

 

Merged with 

Appointed date

 

Effective date

 

Date of allotment

 

Share ratio

 

Value of fraction

(Rs.)

Kothari General Foods Corporation Ltd.

Brooke Bond India Ltd.

 1-Jan-92 1-Jan-92 30-Jun-92 21:1 7.00

Tea Estates India Ltd.

Brooke Bond India Ltd.

1-Jan-93 1-Jun-93 24-Aug-93

10:12 35.25

Doom Dooma India Ltd.

Brooke Bond India Ltd.

1-Jan-93 1-Jun-93 24-Aug-93

10:11 35.25

Kissan Products Ltd.

Brooke Bond India Ltd.

1-Apr-93 20-Jan-94

22-Jan-94 1:100 Not applicable

Lipton India Ltd. Brooke Bond India Ltd.[name changed to Brooke Bond Lipton India Ltd. (BBLIL)]

 1-Jul-93 9-Mar-94

16-May-94

10:9 48.99

The Tata Oil Mills Company Ltd.

Hindustan Lever Ltd.

 1-Apr-93 28-Dec-94

 5-Apr-95 15:2 38.86

BBLIL Hindustan Lever Ltd.

1-Jan-96 21-Mar-97

16-May-97

20:9 52.82

Pond's (India) Ltd.

Hindustan Lever Ltd.

 1-Jan-98 15-Oct-98

3-Mar-99 4:3 525.00

Industrial Perfumes Ltd.

Hindustan Lever Ltd.

1-Jan-99 9-Feb-00 23-Feb-00 5:2 Not applicable

International Bestfoods Ltd.

Hindustan Lever Ltd.

1-Jun-01 26-Sep-01

20-Oct-01  3:2* 73.84

Aviance Limited Hindustan Lever Ltd.

1-Jun-01 25-Sep-01

Not Applicable

 Not Applicable

Not Applicable

Tea Estates India Ltd. (Formerly known as’Thiashola Tea Company

Demerger from Hindustan Lever Limited

1-Apr-05 1-Dec-05

02-Dec-05  ^ Not Applicable

106

Limited’) (TEI)

Doom Dooma Tea Company Ltd (Formerly known as ‘Daverashola Tea Company Limited’) (DDT)

Demerger from Hindustan Lever Limited

1-Apr-051-Dec-05

02-Dec-05  ^^ Not Applicable

Lever India Exports Limited

Hindustan Lever Ltd.

1-Apr-05 30-Dec-05

Not Applicable

 Not Applicable

Not Applicable

Lipton India Exports Limited

Hindustan Lever Limited

1-Jan-0530-Dec-05

Not Applicable

Not Applicable

Not Applicable

Merryweather Food Products Limited

Hindustan Lever Limited

1-Jan-0530-Dec-05

Not Applicable

Not Applicable

Not Applicable

TOC Disinfectants Limited

Hindustan Lever Limited

1-Apr-0530-Dec-05

26-Apr-06 500:1 **Not Applicable

International Fisheries Limited

Hindustan Lever Limited

1-Jan-0530-Dec-05

26-Apr-06 1:1***Not Applicable

Vashisti Detergents Limited

Hindustan Lever Limited

1-Jul-0528-Feb-06

10-Apr-06 10:1**** 28.00

Modern Food Industries (India) Limited & Modern Food and Nutrition Industries Limited

Hindustan Lever Limited

1-Oct-0630-Mar-07

Not Applicable

Not Applicable

Not Applicable

Shamnagar Estates Private Limited, Jamnagar Properties Private Limited and Hindustan Kwality Walls

Demerger of certain Units from Hindustan Lever Limited

1-Nov-06 29-Mar-07

Not Applicable

Not Applicable

Not Applicable

107

Foods Private Limited (now known as Daverashola Estates Private Limited)

Notes : *Swap based on Rs. 10 share of International Bestfoods Ltd. for Re. 1 share of Hindustan Lever.

** Swap based on Rs.5/- share of TOC Disinfectants Limited (TOC) for Re.1/- share of Hindustan Lever Limited

*** Swap based on Rs.100/- share of International Fisheries Limited (IFL) for Re.1/- share of Hindustan Lever Limited

**** Swap based on Rs.10/- share of Vashisti Detergents Limited (VDL) for Re.1/- share of Hindustan Lever Limited

^ 49,50,000 Equity Shares of Rs.10/- each and 10,00,000 Preference Shares of Rs.100/- each were allotted to HLL pursuant to the demerger by TEI

^^ 4,88,000 Equity Shares of Rs.100/- each and 10,00,000 Preference Shares of Rs.100/- each were allotted to HLL pursuant to the demerger by DDT

108

5.3.2 HUL MAY MONTH ANALYSIS

Hindustan Unilever May Equity Table :-

109

110

Symbol Series

Date Prev Close

Open Price

High Price

Low Price

Last Price

Close Price

Average Price

Total Traded Quantity

Turnover in Lacs

HINDUNILVR EQ 4-May-09

234.75

236 242 233.1 239.6 239.9 237.38 4896016 11622.20462

HINDUNILVR EQ 5-May-09

239.9 240 241.5 235.5 237.2 238.35

238.94 2813418 6722.363085

HINDUNILVR EQ 6-May-09

238.35

239.9 240.85

232.2 233.5 234.6 234.99 5167053 12141.97328

HINDUNILVR EQ 7-May-09

234.6 234.5 238 229.35

230.3 230.65

233.23 5075534 11837.50389

HINDUNILVR EQ 8-May-09

230.65

230.75

234.15

230 233.5 233.05

233.15 5443176 12691.00179

HINDUNILVR EQ 11-May-09

233.05

235.25

236.5 226 226.2 227.15

228.22 7025750 16034.23965

HINDUNILVR EQ 12-May-09

227.15

227.6 227.85

221.8 225.2 225.1 223.99 8210288 18390.49832

HINDUNILVR EQ 13-May-09

225.1 225.1 227.2 221.1 220.8 221.95

223.58 3149690 7042.135618

HINDUNILVR EQ 14-May-09

220.8 222 225.65

218.1 225 224.85

220.91 7493434 16553.85609

HINDUNILVR EQ 15-May-09

224.85

226 227.4 223.65

224.55

224.3 224.83 2449088 5506.23301

HINDUNILVR EQ 18-May-09

224.3 244.95

264.4 228 239 239.6 247.92 51515 127.7145265

HINDUNILVR EQ 19-May-09

239.6 245 251 224 230 229.5 228.66 13669545 31256.89658

HINDUNILVR EQ 20-May-09

229.5 234.9 235.85

225 232.95

233.45

228.92 10140045 23212.54873

HINDUNILVR EQ 21-May-09

233.45

233.2 235 226.55

230.05

230.4 229.92 2715676 6243.855165

HINDUNILVR EQ 22-May-09

230.4 231 234.3 228.1 232.8 232 231.58 2391122 5537.462276

HINDUNILVR EQ 25-May-09

232 231 235.5 229.9 231.7 233.05

233.36 3418801 7978.185038

HINDUNILVR EQ 26-May-09

233.05

238.7 238.7 229.5 231.45

231 233.77 3475193 8123.976091

HINDUNILVR EQ 27-May-09

231 233.3 233.3 228.1 230 230.15

229.72 3314721 7614.612061

HINDUNILVR EQ 28-May-09

230.15

232 233.5 228.5 230.8 231 231.19 5375654 12428.16871

HINDUNILVR EQ 29-May-09

231 232 233.9 229.55

231.5 230.8 230.91 4633440 10699.28036

Interpretation:-

This analysis is useful to know where to buy and sell the options such as Call and Puts.

Open Price=236 On 4th May 09

Low Price=218 On 14th May 09

High Price=264 On 18th May 09

Close price=1230 On 29th May 09

In the above graph I calculate Breakeven point for HUL Stock.

Break Even Point(BEP) = (High Price + Low Price)/2

= (264+218)/2

= 241

Again I found margin of safety (MOS)

(1) Margin of safety (mos) = opening share value – BEP

=236-241

=-5

111

So here margin of safety is negative value. So here investor gets more Loss and shorts. Here

investor can buy put options to get more profits. Investors should not go for call options at this

point

(2) Margin of safety (mos) =high share value –BEP

=264-241

=23

So here margin of safety is Positive value. So here investor gets more profits and longs. So

at this point investor can sell their Call options to get more profis.

(3) Margin of safety (mos) =LOW share value – BEP

=218-241

=-23

So here margin of safety is negative. so here investor gets more losses and more shorts.

Investor can sell their Put Option at this point to incur more profits.

HUL MAY MONTH CALL OPTION TABLE(Strike Price=230):-

112

Instrument

Symbol Option

Date Expiry Strike Price

Close

Settle Price

Turnover in Lacs

OPTSTK HINDUNILVR

CA 4-May-09

28-May-09

230 14.05

14.05 87.32

OPTSTK HINDUNILVR

CA 5-May-09

28-May-09

230 14.5 14.5 19.62

OPTSTK HINDUNILVR

CA 6-May-09

28-May-09

230 12.95

12.95 4.85

OPTSTK HINDUNILVR

CA 7-May-09

28-May-09

230 9.3 9.3 95.84

OPTSTK HINDUNILVR

CA 8-May-09

28-May-09

230 10 10 62.45

OPTSTK HINDUNILVR

CA 11-May-09

28-May-09

230 6.8 6.8 218.24

OPTSTK HINDUNILVR

CA 12-May-09

28-May-09

230 6.05 6.05 393.6

OPTSTK HINDUNILVR

CA 13-May-09

28-May-09

230 4.85 4.85 315.39

OPTSTK HINDUNILVR

CA 14-May-09

28-May-09

230 5.75 5.75 500.32

OPTSTK HINDUNILVR

CA 15-May-09

28-May-09

230 5.3 5.3 289.54

OPTSTK HINDUNILVR

CA 18-May-09

28-May-09

230 8.55 8.55 7.22

OPTSTK HINDUNILVR

CA 19-May-09

28-May-09

230 6.95 6.95 428.93

OPTSTK HINDUNILVR

CA 20-May-09

28-May-09

230 8 8 395.65

OPTSTK HINDUNILVR

CA 21-May-09

28-May-09

230 6.15 6.15 355.92

OPTSTK HINDUNIL CA 22-May- 28-May- 230 5.95 5.95 332.6

113

VR 09 09

OPTSTK HINDUNILVR

CA 25-May-09

28-May-09

230 5.85 5.85 188.92

OPTSTK HINDUNILVR

CA 26-May-09

28-May-09

230 3.25 3.25 218.34

OPTSTK HINDUNILVR

CA 27-May-09

28-May-09

230 2.55 2.55 230.15

OPTSTK HINDUNILVR

CA 28-May-09

28-May-09

230 0.8 0 383.37

OBSERVATIONS AND FINDINGS

MAY CALL OPTIONS

Buyers Pay OFF:

114

As brought 1 Lot of HUL that is 1000 those who buy for 230 paid 14.03 Premium Per Share.

Spot price taken on 13th may 09 is 220.8, such as call option sold on 13th may 09. Spot price 220.8 Strike price 230.00 Amount -9.2 Net Loss -9.2*1000=-9200 Buyer Loss = Rs 11500(Net Amount)

Because it is negative it is OUT OF THE MONEY contract, hence buyer will get more Loss, incase spot price decreases buyer Loss also increases.

SELLERS PAY OFF:

It is OUT OF THE MONEY for the buyer, so it is IN THE MONEY for seller , hence his Profit increases.

Strike price 220.8

Spot price 230.00

Amount 9.2

Profit 9.2*1000=9200

Seller Profit = Rs 9200(Profit)

Because it is positive so it is IN THE MONEY, hence seller will get more profit, incase spot price increases in above strike price, seller get loss in premium level.

HUL MAY MONTH PUT OPTION TABLE(Strike Price=230):-

Instrument

Symbol Option

Date Expiry Strike Price

Close

Settle Price

Turnover in Lacs

Open Int

OPTSTK HINDUNILVR

PA 4-May-09

28-May-09

230 4.9 4.9 98.76 60000

115

OPTSTK HINDUNILVR

PA 5-May-09

28-May-09

230 5.05

5.05 108.01 88000

OPTSTK HINDUNILVR

PA 6-May-09

28-May-09

230 6.15

6.15 108.6 99000

OPTSTK HINDUNILVR

PA 7-May-09

28-May-09

230 7.75

7.75 189.21 118000

OPTSTK HINDUNILVR

PA 8-May-09

28-May-09

230 6.4 6.4 35.45 126000

OPTSTK HINDUNILVR

PA 11-May-09

28-May-09

230 9.85

9.85 105.18 115000

OPTSTK HINDUNILVR

PA 12-May-09

28-May-09

230 10.35

10.35 52.99 114000

OPTSTK HINDUNILVR

PA 13-May-09

28-May-09

230 12.45

12.45 41 106000

OPTSTK HINDUNILVR

PA 14-May-09

28-May-09

230 9.95

9.95 21.89 108000

OPTSTK HINDUNILVR

PA 15-May-09

28-May-09

230 10.3

10.3 57.45 99000

OPTSTK HINDUNILVR

PA 18-May-09

28-May-09

230 10.3

3.45 0 99000

OPTSTK HINDUNILVR

PA 19-May-09

28-May-09

230 6.25

6.25 42.65 97000

OPTSTK HINDUNILVR

PA 20-May-09

28-May-09

230 4.65

4.65 65.84 94000

OPTSTK HINDUNILVR

PA 21-May-09

28-May-09

230 5.85

5.85 37.72 92000

OPTSTK HINDUNILVR

PA 22-May-09

28-May-09

230 3.95

3.95 86.76 96000

OPTSTK HINDUNILVR

PA 25-May-09

28-May-09

230 2.65

2.65 74.5 94000

OPTSTK HINDUNIL PA 26-May- 28-May- 230 3.1 3.15 97.53 90000

116

VR 09 09 5

OPTSTK HINDUNILVR

PA 27-May-09

28-May-09

230 1.9 1.9 78.98 100000

OPTSTK HINDUNILVR

PA 28-May-09

28-May-09

230 0.1 0 115.41 110000

OBSERVATIONS AND FINDINGS

MAY PUT OPTION

BUYERS PAY OFF:

Those who have purchase put option at a strike price 230, the premium payable is 8.9.

On 12th may the spot market price enclosed at . Strike Price 230 Spot price 215.65 Amount -14.35

117

Premium Paid(-) 8.9 Profit 5.45*1000=5450 So, he got profit up to Rs 5450

Because it is positive, IN THE MONEY contract, hence buyer gets profit, incase spot price increases above strike price, buyer get loss in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if buyer is in profit and also seller has to get total loss.

Spot Price 230 Strike Price 215.65 Amount -14.35 Premium received (+) 8.9 Loss -5.45*1000=-5450

Already Premium Received So, he can get Loss up to Rs 5450

Because it is Loss, OUT OF THE MONEY Contract, hence seller gets more Loss , incase Spot price increases above strike price seller can get profit in premium.

118

4-May

-09

6-May

-09

8-May

-09

10-May

-09

12-May

-09

14-May

-09

16-May

-09

18-May

-09

20-May

-09

22-May

-09

24-May

-09

26-May

-090

50

100

150

200

250

HUL(May Options) Strike Price=230

Underlying valueCall PricePut Price

Date

Stoc

k Pr

ice

On 7th may 09 HUL lost market shares to rivals in March ended quarter. so that share value decreased slightly.

On 11th may 09 HUL has announced its numbers for the quarter ended January-March 2009. Its net profit increased 3.7% to Rs 394.99 crore from Rs 380.9 crore. Its operating profit margin (OPM) went up 302 bps at 13.77% versus 10.75% and adjusted profit after tax (APAT) rose 32.67% to Rs 502.08 crore versus Rs 378.43 crore. The company's net sales advanced 5.1% to Rs 3,988.33 crore as against Rs 3,793.9 crore. HUL has reported exceptional loss of Rs 107.09 crore versus gain of Rs 2.5 crore.Its Exports Sales down 44.7% at Rs 220.47 crore versus Rs 398.93 croreEBIT margins up 208bps at Rs 6.5% versus 4.4%  

119

Instrument

Symbol Date Expiry Open

High Low Close

LTP Settle Price

No. of contracts

Turnover in lacs

Open Int Change in OI

FUTSTK HINDUNILVR

4-May-09

28-May-09

237.8

242.5

234.6

240 239.8

240 4154 9921.02 9431000 -204000

FUTSTK HINDUNILVR

5-May-09

28-May-09

238 241.55

236.2

238.4

237.8

238.4

2509 6000.31 9095000 -336000

FUTSTK HINDUNILVR

6-May-09

28-May-09

237.5

240.35

233.25

235.65

234.8

235.65

3286 7757.95 9680000 585000

FUTSTK HINDUNILVR

7-May-09

28-May-09

236 237.85

229.05

230.8

230.6

230.8

3907 9129.2 9177000 -503000

FUTSTK HINDUNILVR

8-May-09

28-May-09

230.65

234.4

230.65

233.1

232.95

233.1

3327 7762.84 9268000 91000

FUTSTK HINDUNILVR

11-May-09

28-May-09

234 236 226.1

226.7

226.15

226.7

3303 7542.72 9478000 210000

FUTSTK HINDUNILVR

12-May-09

28-May-09

228 228 222.75

226 226.2

226 2820 6337.17 10006000 528000

FUTSTK HINDUNILVR

13-May-09

28-May-09

226 227 221.05

221.9

221.5

221.9

3590 8030.4 10659000 653000

FUTSTK HINDUNILVR

14-May-09

28-May-09

220 226 218.75

225.5

225.9

225.5

3666 8142.34 10473000 -186000

FUTSTK HINDUNILVR

15-May-09

28-May-09

226.95

227 224.6

225.25

225.5

225.25

1953 4406.49 10767000 294000

FUTSTK HINDUNILVR

18-May-09

28-May-09

238 241.5

230.05

238.3

240 238.3

66 157.03 10733000 -34000

FUTSTK HINDUNILVR

19-May-09

28-May-09

242.2

243.9

225.5

230.7

229.5

230.7

7803 17966.62

11289000 556000

FUTSTK HINDUNILVR

20-May-09

28-May-09

228.95

235.5

226.1

233.45

233 233.45

4357 10003.06

10733000 -556000

FUTSTK HINDUNILVR

21-May-09

28-May-09

234 234 227.1

230.3

229.8

230.3

2691 6197.84 9957000 -776000

FUTSTK HINDUNILVR

22-May-09

28-May-09

230.9

233.9

228.1

231.85

232.2

231.85

3421 7912.2 8637000 -1320000

FUTSTK HINDUNILVR

25-May-09

28-May-09

230.2

234.85

229.15

232.8

232.15

232.8

4485 10442.5 6059000 -2578000

FUTSTK HINDUNILVR

26-May-09

28-May-09

232.1

235.4

228.1

230.2

230 230.2

3779 8793.4 4747000 -1312000

FUTSTK HINDUNILVR

27-May-09

28-May-09

231.5

233 227.6

230.6

230.5

230.6

6303 14501.8 3975000 -772000

FUTSTK HINDUNILVR

28-May-09

28-May-09

230.85

233.55

228.35

231.1

231.1

231 2767 6401.78 3463000 -512000

120

4-May

-09

6-May

-09

8-May

-09

10-May

-09

12-May

-09

14-May

-09

16-May

-09

18-May

-09

20-May

-09

22-May

-09

24-May

-09

26-May

-09

28-May

-09205210215220225230235240245250255

HUL(May Futures)

Underlying PriceFuture Price

Date

Stock Price

Future Market

BUYER SELLER

12/05/09(buying) 226 226

28/05/09(Closing Period) 221 221

Profit = 5 Loss = 5

Profit 5*1000=5000 Loss 5*1000=5000

Because buyer Future price will increase so, profit also increases. Seller Future price also increases so, he can get loss. Incase seller Future will decreases, he can get profit.

The closing Price of HUL at the end of contract period is 221 and this is considered as settlement price.

121

HUL JUNE MONTH ANALYSIS

122

Symbol Series

Date Prev Close

Open Price

High Price

Low Price

Last Price

Close Price

Average Price

Total Traded Quantity

Turnover in Lacs

HINDUNILVR EQ 1-Jun-09

230.8 228.55

233.45

228.55

232.2 232.65

231.93 2701891 6266.587392

HINDUNILVR EQ 2-Jun-09

232.65

233.1 235.15

232.55

233.5 233.75

233.51 3417724 7980.572611

HINDUNILVR EQ 3-Jun-09

233.75

235 241 233.45

238 239.7 236.7 4986667 11803.6118

HINDUNILVR EQ 4-Jun-09

239.7 236.5 251 236.5 249.3 249.5 247.75 4636344 11486.59379

HINDUNILVR EQ 5-Jun-09

249.5 250.25

257.7 246.2 252 252 252.91 4499129 11378.87204

HINDUNILVR EQ 8-Jun-09

252 252 253.5 245.35

252.15

252.25

249.27 2847980 7099.03176

HINDUNILVR EQ 9-Jun-09

252.25

252 259 248.25

257 256.75

253.55 2932775 7436.116014

HINDUNILVR EQ 10-Jun-09

256.75

257 269.9 256 263.6 264.35

263.99 6277803 16573.06262

HINDUNILVR EQ 11-Jun-09

264.35

264 264.9 258.5 260.2 259.95

260.92 3587460 9360.251865

HINDUNILVR EQ 12-Jun-09

259.95

257 258.5 252 256.05

255.75

255.52 4793781 12249.10305

HINDUNILVR EQ 15-Jun-09

255.75

257.9 262.85

252.15

262.75

259.15

258.77 4900720 12681.51215

HINDUNILVR EQ 16-Jun-09

259.15

258 265.75

257.7 265.35

268.4 260.06 2197923 5716.010496

HINDUNILVR EQ 17-Jun-09

268.4 267 267 256.4 261.95

261.6 261.1 2993196 7815.193043

HINDUNILVR EQ 18-Jun-09

261.6 261.25

265.5 257.6 260.1 259.75

261.07 2837816 7408.632434

HINDUNILVR EQ 19-Jun-09

259.75

260.5 263 259.05

260.6 260.75

260.47 1906831 4966.735851

HINDUNILVR EQ 22-Jun-09

260.75

260.55

263.5 252.4 259.3 259.25

260.03 5785095 15042.96081

HINDUNILVR EQ 23-Jun-09

259.25

259.25

262 255.7 260 260.05

259.54 3885451 10084.41348

HINDUNILVR EQ 24-Jun-09

260.05

261 264.35

258 261.95

263.59

261.39 2005337 5241.832353

HINDUNILVR EQ 25-Jun-09

263.59

262.05

265.4 257 257.7 258.95

259.46 6800388 17644.56393

HINDUNILVR EQ 26-Jun-09

258.95

259.65

268 257.6 266.6 266.05

262.47 3310926 8690.258465

HINDUNILVR EQ 29-Jun-09

266.05

266 269.7 262.25

268 266.6 266.98 2878839 7685.9485

HINDUNILVR EQ 30-Jun-09

266.6 265 271.45

264.65

269 267.5 269.18 4224981 11372.90613

Interpretation:-

This analysis is useful to know where to buy and sell the options such as Call and

Puts.

Open Price=228 On 1st June 09

Low Price=228 On 2nd june 09

High Price=271 On 30th june 09

Close price=267 On 30th june 09

In the above graph I calculate Breakeven point for GMRINFRA Stock.

Break Even Point(BEP) = (High Price + Low Price)/2

= (228+271)/2

= 249

Again I found margin of safety (MOS)

(1) Margin of safety (mos) = opening share value – BEP

=228-249

=-13

123

So here margin of safety is negative value. So here investor gets more Loss and longs. Here

investor can buy put options to get more profits. Investors should not go for call options at this

point

(2) Margin of safety (mos) =high share value –BEP

=271-249

=22

So here margin of safety is Positive value. So here investor gets more profits and longs. So

at this point investor can sell their Call options to get more profits.

(3) Margin of safety (mos) =LOW share value – BEP

=228-249

=-13

So here margin of safety is negative. so here investor gets more losses and more shorts.

Investor can sell their Put Option at this point to incur more profits.

124

HUL JUNE MONTH CALL TABLE(Strike Price=250):-

Instrument

Symbol Option

Date Expiry Strike Price

Close

Settle Price

Turnover in Lacs

OPTSTK HINDUNILVR

CA 1-Jun-09

25-Jun-09

250 2.9 2.9 192.03

OPTSTK HINDUNILVR

CA 2-Jun-09

25-Jun-09

250 3 3 131.49

OPTSTK HINDUNILVR

CA 3-Jun-09

25-Jun-09

250 4.1 4.1 768.74

OPTSTK HINDUNILVR

CA 4-Jun-09

25-Jun-09

250 7.65 7.65 1426.62

OPTSTK HINDUNILVR

CA 5-Jun-09

25-Jun-09

250 7.7 7.7 1060.57

OPTSTK HINDUNILVR

CA 8-Jun-09

25-Jun-09

250 7.85 7.85 510.86

OPTSTK HINDUNILVR

CA 9-Jun-09

25-Jun-09

250 9.7 9.7 866.42

OPTSTK HINDUNILVR

CA 10-Jun-09

25-Jun-09

250 15.35

15.35 513.23

OPTSTK HINDUNILVR

CA 11-Jun-09

25-Jun-09

250 11.25

11.25 151.99

OPTSTK HINDUNILVR

CA 12-Jun-09

25-Jun-09

250 10.25

10.25 140.24

OPTSTK HINDUNILVR

CA 15-Jun-09

25-Jun-09

250 13.9 13.9 125.75

OPTSTK HINDUNILVR

CA 16-Jun-09

25-Jun-09

250 15.85

15.85 39.6

OPTSTK HINDUNILVR

CA 17-Jun-09

25-Jun-09

250 13.45

13.45 55.23

OPTSTK HINDUNILVR

CA 18-Jun-09

25-Jun-09

250 11.3 11.3 52.88

125

OPTSTK HINDUNILVR

CA 19-Jun-09

25-Jun-09

250 14.2 14.2 26.31

OPTSTK HINDUNILVR

CA 22-Jun-09

25-Jun-09

250 10.4 10.4 31.28

OPTSTK HINDUNILVR

CA 23-Jun-09

25-Jun-09

250 10.4 10.4 33.95

OPTSTK HINDUNILVR

CA 24-Jun-09

25-Jun-09

250 13.5 13.5 15.82

OPTSTK HINDUNILVR

CA 25-Jun-09

25-Jun-09

250 10.95

0 20.78

OBSERVATIONS AND FINDINGS

JUNE CALL OPTIONS

Buyers Pay OFF:

126

As brought 1 Lot of HUL that is 1000 those who buy for 250 paid 2.9 Premium Per Share.

Settlement Price is 263.5 Spot price 263.5 Strike price 250.00 Amount 13.5 Premium Paid (-) 2.9 Net Profit 10.6*1000=10600 Buyer Profit = Rs 10600(Net Amount)

Because it is positive it is IN THE MONEY contract, hence buyer will get more profit, incase spot price increase buyer profit also increases.

SELLERS PAY OFF:

It is in the money for the buyer, so it is n out of the money for seller , hence his loss is also increases.

Strike price 263.5

Spot price 250.00

Amount -13.5

Premium Received 2.9

Loss -10.6*1000=-10600

Seller loss = Rs -10600(Loss)

Because it is negative it is out of the money, hence seller will get more loss, incase spot price decreases in below strike price, seller get profit in premium level.

HUL JUNE MONTH PUT OPTION TABLE:-

Instrument

Symbol Option

Date Expiry Strike Price

Close

Settle Price

Turnover in Lacs

OPTSTK HINDUNILVR

PA 1-Jun-09 25-Jun-09

250 21.35

20.25 0

OPTSTK HINDUNILVR

PA 2-Jun-09 25-Jun-09

250 21.35

19.1 0

OPTSTK HINDUNILV PA 3-Jun-09 25-Jun- 250 21.3 14.95 0

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R 09 5OPTSTK HINDUNILV

RPA 4-Jun-09 25-Jun-

09250 10.8

510.85 28.73

OPTSTK HINDUNILVR

PA 5-Jun-09 25-Jun-09

250 9.2 9.2 114

OPTSTK HINDUNILVR

PA 8-Jun-09 25-Jun-09

250 9 9 57.24

OPTSTK HINDUNILVR

PA 9-Jun-09 25-Jun-09

250 6.15 6.15 380.16

OPTSTK HINDUNILVR

PA 10-Jun-09

25-Jun-09

250 3.85 3.85 449.25

OPTSTK HINDUNILVR

PA 11-Jun-09

25-Jun-09

250 5 5 249.56

OPTSTK HINDUNILVR

PA 12-Jun-09

25-Jun-09

250 4.55 4.55 135.03

OPTSTK HINDUNILVR

PA 15-Jun-09

25-Jun-09

250 2.85 2.85 220.52

OPTSTK HINDUNILVR

PA 16-Jun-09

25-Jun-09

250 1.55 1.55 153.75

OPTSTK HINDUNILVR

PA 17-Jun-09

25-Jun-09

250 1.85 1.85 125.93

OPTSTK HINDUNILVR

PA 18-Jun-09

25-Jun-09

250 1.55 1.55 125.77

OPTSTK HINDUNILVR

PA 19-Jun-09

25-Jun-09

250 1 1 160.81

OPTSTK HINDUNILVR

PA 22-Jun-09

25-Jun-09

250 0.85 0.85 60.18

OPTSTK HINDUNILVR

PA 23-Jun-09

25-Jun-09

250 0.55 0.55 77.79

OPTSTK HINDUNILVR

PA 24-Jun-09

25-Jun-09

250 0.15 0.15 22.52

OPTSTK HINDUNILVR

PA 25-Jun-09

25-Jun-09

250 0.05 0 20.01

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OBSERVATIONS AND FINDINGS

JUNE PUT OPTION

BUYERS PAY OFF:

Those who have purchase put option at a strike price 250, the premium payable is 21.1.

On 17th june 09 taken as spot market price enclosed at 268.4 Strike Price 250 Spot price 268.4 Net Pay Off -18.4*1000=-18400 Already Premium paid is 20.25 So, he get loss up to Rs 18400

Because it is negative, out of the money contract, hence buyer gets more loss, incase spot price decrease in below strike price, buyer get profit in premium level.

SELLERS PAY OFF:

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As seller is entitled only for premium so,if he is in profit and also seller has to get total profit.

Spot Price 268.5 Strike Price 250.0 Net Pay off 18.4*1000=18400

Already Premium Received 20.25So, he can get profit up to Rs 18400

Because it is positive, in the money Contract, hence seller gets more profit, incase Spot price decrease in below strike price seller can get loss in premium.

1-Jun-09

3-Jun-09

5-Jun-09

7-Jun-09

9-Jun-09

11-Jun-09

13-Jun-09

15-Jun-09

17-Jun-09

19-Jun-09

21-Jun-09

23-Jun-09

0

50

100

150

200

250

300

HUL(June Options)Strike Price=250

Underlying PriceCall PricePut Price

Date

Stoc

k Pr

ice

, HUL was among major gainers on the Sensex on 4th june 09. It was trading with volumes of 478,620 shares. So the share value increased drastically on 4th june 09. Hindustan Unilever has

130

added 3.7 lakh shares in open interest. Rollovers are strong into this month so positive traction seen in HUL in June month.

HUL plans to sell 49% stake in BPO arm by 2010 reported by ET on june 9th 09.Tthere is decrease in share value due to this news.

HUL is up nearly Rs 10 with a build up of nearly 13 lakh shares in OI which is around 10% in a single trading session On 10th june 09. Which lifted up the share value.

HUL JUNE MONTH FUTURES TABLE:-

Instrument

Symbol Date Expiry Open

High

Low Close

LTP Settle Price

No. of contracts

Turnover in lacs

Open Int Change in OI

FUTSTK

HINDUNILVR

1-Jun-09

25-Jun-09

228.5

230.45

227 230 230.2

230 2560 5857.96 9537000 102000

FUTSTK

HINDUNILVR

2-Jun-09

25-Jun-09

230 231.3

229.1

230.3

230.05

230.3 2196 5051.82 9463000 -74000

FUTSTK

HINDUNILVR

3-Jun-09

25-Jun-09

231.4

237.45

230.5

236.15

235 236.15 4720 11042.89 9505000 42000

FUTSTK

HINDUNILVR

4-Jun-09

25-Jun-09

236.25

247.45

235.5

246.35

246.25

246.35 5599 13653.05 9016000 -489000

FUTSTK

HINDUNILVR

5-Jun-09

25-Jun-09

245.3

255 242.5

248.45

249.25

248.45 4840 12053.52 8533000 -483000

FUTSTK

HINDUNILVR

8-Jun-09

25-Jun-09

248.2

249.65

242.55

248.65

248.7

248.65 2659 6544.39 8801000 268000

FUTSTK

HINDUNILVR

9-Jun-09

25-Jun-09

246.55

254.2

246.3

252.95

252.8

252.95 2624 6570.09 8955000 154000

FUTSTK

HINDUNILVR

10-Jun-09

25-Jun-09

254 266.65

254 261.5

261.25

261.5 5705 14884.37 9495000 540000

FUTSTK

HINDUNILVR

11-Jun-09

25-Jun-09

261.1

261.95

255 256.65

257.2

256.65 2573 6637.55 8949000 -546000

FUTSTK

HINDUNILVR

12-Jun-09

25-Jun-09

257.2

257.5

252.25

255.7

256.5

255.7 3087 7878.33 8466000 -483000

FUTS HINDUNI 15-Jun- 25- 257. 262 252. 260. 262. 260.45 2519 6500.22 8729000 263000

131

TK LVR 09 Jun-09 5 .9 5 45 15FUTSTK

HINDUNILVR

16-Jun-09

25-Jun-09

260 266.35

257.8

264 264 264 2574 6717.66 8840000 111000

FUTSTK

HINDUNILVR

17-Jun-09

25-Jun-09

264 264 259.35

261.35

261.05

261.35 5023 13111.94 8348000 -492000

FUTSTK

HINDUNILVR

18-Jun-09

25-Jun-09

261.2

265.8

258.4

260.6

261.15

260.6 5677 14897.88 7856000 -492000

FUTSTK

HINDUNILVR

19-Jun-09

25-Jun-09

260.9

263.8

259.35

262.05

261.8

262.05 3380 8830.21 7220000 -636000

FUTSTK

HINDUNILVR

22-Jun-09

25-Jun-09

261.15

263.4

257.65

259.65

259 259.65 4174 10881.56 5564000 -1656000

FUTSTK

HINDUNILVR

23-Jun-09

25-Jun-09

259.9

262.3

255.55

260 259.95

260 3718 9652.07 5194000 -370000

FUTSTK

HINDUNILVR

24-Jun-09

25-Jun-09

262.7

264.1

258.25

263.4

263.2

263.4 2352 6145.22 4824000 -370000

FUTSTK

HINDUNILVR

25-Jun-09

25-Jun-09

262.9

264 258.1

258.9

258.9

258.95 3328 8646.9 4046000 -778000

1-Jun-09

3-Jun-09

5-Jun-09

7-Jun-09

9-Jun-09

11-Jun-09

13-Jun-09

15-Jun-09

17-Jun-09

19-Jun-09

21-Jun-09

23-Jun-09

25-Jun-09

210220230240250260270

HUL(June Futures)

Underlying PriceFuture Price

Date

Stoc

k Pr

ice

Future Market

BUYER SELLER

12/06/09(buying) 255.7 255.7

29/06/09(Closing Period) 258.95 258.95

Profit = 3.25 Loss =3.25

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Profit 3.25*1000=3250 Loss 3.25*1000=3250

Because buyer Future price will increase so, profit also increases. Seller Future price also increases so he can get loss. Incase seller Future will decreases, he can get profit.

The closing Price of HUL at the end of contract period is 258.95 and this is considered as settlement price.

133