“A PROJECT REPORT ON DERIVATIES – INDIA BULLS

A project report submitted to Jawaharlal Nehru Technological University, Kakinada, in partial

fulfilment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted By

GUTTULA JAYA SAI SREE HARISH

MBA (final)
Regd. No. 198Z1E00C6

Under the guidance of

Shri. B. SWAMY
MBA,

ASSISTANT PROFESSOR

DEPARTMENT OF MANAGEMENT STUDIES

RAJIV GANDHI INSTITUTE OF MANAGEMENT & SCIENCE
(Affiliated to JNTU, Kakinada)
ADB Road, Kakinada – 533005 Andhra Pradesh.
URL: www.rimsmba.org

2019-2021
 Indiabulls Securities Limited
Refd. Office: F-60, 2nd Floor, Malhotra Building
Connaught Place, New Delhi – 110001

CERTIFICATE

This is to certify that the project entitled “DERIVATIVES” submitted by

Mr.G. JAYA SAI SREE HARISH, (Roll No: 198Z1E00C6), in partial fulfillment for the
award of the degree of MBA, is a Bonafide work carried out by her in ‘INDIABULLS
SECURITIES LIMITED’,Hyderabad. The duration of project is 45 days from 1st NOV 2020
to 15th DEC 2020, under our guidance and supervision.

He has completed the assigned project as per requirement within the time frame, him
performance during the work period was found to be excellent.

We wish all the best in her future endeavours.

For Indiabulls Securities Limited

Ascent Towers, Road No 10, Banjara Hills, Hyderabad – 500034 http://www.indiabulls.com

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 DECLARATION

I here by declare that the project work entitled “DERIVATIVES - INDIA BULLS” submitted
to the Department of Business Management. comprises of my own work. It has not been
submitted fully or partially to this university or any other university for the award of degree of
Master of Business Administration or any other degree.

Place: Kakinada (GUTTULA JAYA SAI SREE HARISH)

Date: 198Z1E00C6

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 ACKNOWLEDGEMENTS

At the outset I convey my heartiest regards to Dr. M. VENKAT RAO, Principal, Rajiv
Gandhi Institute of Management & Science, for his valuable support and help in completing my
project work.

My sincere and grateful thanks to Mr. K. SANJAY KUMAR, MBA, (PhD), Head,
Department of Business Administration for his immeasurable support and to my guide Shri D.
RAMA KRISHNA for her guidance in preparation of my project work.

I convey my profound gratitude to Mr. T. A. PAUL RAJ KUMAR, Personnel Manager,

BSNL, Eluru and Mr. V. VIKRAM RAMA RAJU, Welfare Officer and to the employees of
Personnel Department for rendering their valuable help during my project training. I thank them
for their co-operation and suggestions given to me.

I express my deep sense of gratitude and whole hearted thanks to all my family members,
relatives and friends for their moral support and encouragement.

(GUTTULA JAYA SAI SREE HARISH)

(198Z1E00C6)

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 ABSTRACT

Derivative securities are considered as additional means for informed traders to trade on their

information and for others to discover that information. The study examines the role of options

market open interest in conveying information about the future price movement of the

underlying asset. This study tries to find out whether the activity in the equity options market

contain any information about future stock price that can be exploited for trading purposes. The

data for this study is taken from the daily data posted on the NSE website. The study covers

stock option contracts for a specific period The Objective of this analysis is to evaluate the

profit/loss position futures and options. This analysis is based on sample data taken of

BHEL&ONGC . Price is predicted using the Open Interest Price Predictor given by Bhuyan and

Chaudhury (2001). This price is correlated with the actual stock’s closing price. The correlated

results shows that all Open Interest Predicted Price calculated using the open interest of the

underlying have the same trend pattern as the closing price of the underlying stock. This study

proves that the activity in the equity options market contain useful information about future stock

price that can be used for trading purposes.

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 TABLE OF CONTENTS

Chapter Particulars Page No

1 INTRODUCTION 7-30
2 REVIEW OF LITERATURE 31-35
3 COMPANY PROFILE 36-47
4 DATA ANALYSIS AND 48-68
INTERPRETATION
5 FINDINGS , SUGGESTIONS, 69-71
LIMITATIONS & CONCLUSIONS
6 BIBILOGRAPHY 72

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CHAPTER 1 - INTRODUCTION

DERIVATIVES

Derivatives have become very important in the field of finance. They are very important

financial instruments for risk management as they allow risks to be separated and traded.

Derivatives are used to shift risk and act as a form of insurance. This shift of risk means that each

party involved in the contract should be able to identify all the risks involved before the contract

is agreed. It is also important to remember that derivatives are derived from an underlying asset.

This means that risks in trading derivatives may change depending on what happens to the

underlying asset.

OBJECTIVE

 The Objective of this analysis is to evaluate the profit/loss position futures and options.
This analysis is based on sample data taken of BHEL&ONGC .
 To study various trends in derivatives
 To study in detail the role of future and options

NEED OF THE STUDY

Different investment avenues are available to investors. Stock market also offers good
investment opportunities to the investors alike all investments, they also carry certain risks. The
investor should compare the risk and expected yields after adjustment of tax on various
instruments, while taking investment decision investor may seek advice from expatry and
consultancy include stock brokers and analyst while making investment decisions.

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Derivatives act as a risk hedging tool for investors.The objective is to help the investor select the
appropriate derivatives instrument to attain maximum risk and construct the portfolio

SCOPE
 The study is limited to derivatives with specific reference to futures and options in the
Indian context
 The study is limited to the analysis made for type of instruments of derivatives. Each
strategy is analyzed according to its risk and return characteristics and derivatives
performance against profit and policies of the company

STATEMENT OF HYPOTHESIS

• The functioning of derivative is effective

• The overhauling of the derivative is imperative to realize its full potentiality.

RESEARCH METHODOLOGY

 The primary sources of collection of the data would be from SEBI, Derivatives

Exchange, Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), MCX,

NCDEX, Financial Institutions, Purposeful Random Sampling technique been

administered for collecting primary data.

 The research would include primarily the study of existing mechanism of various

methods of trading in stock exchanges (derivatives,etc.), its history, success and failures.

 Study the emergence of derivatives method of trading in the world and in India.

 Studying its regulatory structure, by finding out their weaknesses and strengths.

 Studying the impact of derivatives trading on the Indian Financial System.

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  Analyzing them and recommending ways to stabilize the regulatory system of

derivatives.

 Descriptive and Exploratory research methods are used to gather and analyze data.

Exploratory research would rely on collection of data through secondary research such as

reviewing available literature and/or data, or qualitative approaches. Internet research

methods, the results of exploratory research would provide significant insight into a

given situation or concept.

LIMITATIONS

 The subject of derivatives is vast , it requires extensive study and research to understand

the depth of various instruments operating in the market

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

investor. However the study was conducted towards risk minimization and profit

maximization of the investor

 The derivatives market is dynamic, premiums, strike price, contract rates fluctuates on

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

considered and interpreted.

DEFINITION OF DERIVATIVES

Derivative is a contract or a product whose value is derived from value of some other asset

known as underlying. Derivatives are based on wide range of underlying assets. These include:

Metals such as Gold, Silver, Aluminium, Copper, Zinc, Nickel, Tin, Lead etc. Energy resources

such as Oil (crude oil, products, cracks), Coal, Electricity, Natural Gas etc. Agri commodities

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such as wheat, Sugar, Coffee, Cotton, Pulses etc, and Financial assets such as Shares, Bonds and

Foreign Exchange.

Derivatives include:

1. A security derived from a debt instrument, share, 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.

The following are the various types of derivatives. They are:

Forwards

It is a contractual agreement between two parties to buy/sell an underlying asset at a certain

future date for a particular price that is pre-decided on the date of contract. Both the contracting

parties are committed and are obliged to honour the transaction irrespective of price of the

underlying asset at the time of delivery. Since forwards are negotiated between two parties, the

terms and conditions of contracts are customized. These are Over-the-counter (OTC) contracts.

Futures

A futures contract is similar to a forward, except that the deal is made through an organized and

regulated exchange rather than being negotiated directly between two parties. Indeed, we may

say futures are exchange traded forward contracts.

Options

An Option is a contract that gives the right, but not an obligation, to buy or sell the underlying on

or before a stated date and at a stated price. While buyer of option pays the premium and buys

the right, writer/seller of option receives the premium with obligation to sell/ buy the underlying

asset, if the buyer exercises his right.

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Swaps

A swap is an agreement made between two parties to exchange cash flows in the future

according to a prearranged formula. Swaps are, broadly speaking, series of forward contracts.

Swaps help market participants manage risk associated with volatile interest rates, currency

exchange rates and commodity prices.

Interest rate swaps: The 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.

SWAPTIONS:

Swaptions are options to buy or sell a swap 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 market 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 received

floating.

PARTICIPANTS IN THE DERIVATIVE MARKET

There are broadly three types of participants in the derivatives market - hedgers, traders (also

called speculators) and arbitrageurs. An individual may play different roles in different market

circumstances.

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Hedgers They face risk associated with the prices of underlying assets and use derivatives to

reduce their risk. Corporations, investing institutions and banks all use derivative products to

hedge or reduce their exposures to market variables such as interest rates, share values, bond

prices, currency exchange rates and commodity prices.

Speculators/Traders They try to predict the future movements in prices of underlying assets

and based on the view, take positions in derivative contracts. Derivatives are preferred over

underlying asset for trading purpose, as they offer leverage, are less expensive (cost of

transaction is generally lower than that of the underlying) and are faster to execute in size (high

volumes market).

Arbitrageurs Arbitrage is a deal that produces profit by exploiting a price difference in a

product in two different markets. Arbitrage originates when a trader purchases an asset cheaply

in one location and simultaneously arranges to sell it at a higher price in another location. Such

opportunities are unlikely to persist for very long, since arbitrageurs would rush in to these

transactions, thus closing the price gap at different locations.

INTRODUCTION OF FUTURES

Futures markets were designed to solve the problems that exist in forward markets. 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. But unlike forward contract, the futures contracts are standardized and

exchange traded. To facilitate liquidity in the futures contract, the exchange specifies certain

standard features of the contract. It is standardized contract with standard underlying instrument,

a standard quantity and quality of the underlying instrument that can be delivered,(Or which can

be used for reference purpose in settlement) and a standard timing of such settlement.

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 A futures contract may be offset prior to maturity by entering into an equal and opposite

transaction. More than 90% of futures transactions are offset this way.

The standardized items in a futures contract are:

 Quantity of the underlying.

 Quality of the underlying.

 The date and the month of delivery.

 The units of price quotation and minimum price change.

 Location of settlement.

DEFINITON OF FUTURES

A futures contract is similar to a forward, except that the deal is made through an organized and

regulated exchange rather than being negotiated directly between two parties. Indeed, we may

say futures are exchange traded forward contracts.

Futures contracts are classified in to the following types:

1. Commodity futures:-

Future’s contract is made between the 2 parties to buy and sell the particular commodities at a

particular price & at a particular time period. Underlying assets for these contracts are

agricultural products, gold, silver, iron, bronze etc.

2. Financial futures:-

a.Stock futures:-These contracts are based on stock market indexes various agreements are

made on the basis of securities issued by different companies the different indexes for changes of

stock values are given by various exchanges.

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b.Interest rate futures:-

To protect the future interest rates various contracts are made. They bare applicable for bonds,

debentures and other debt instruments.

c.Foreign exchange futures:-

These contracts are useful for the exports and imports to protect the appreciation and

depreciation of particular currency rates.

d. Cost of living index futures:-

They are also called inflation futures contracts based on a specified cost of living index.

DISTINCTION BETWEEN FUTURES AND FORWARDSCONTRACTS

Forward contracts are often confused with futures contracts. The confusion is primarily because

both serve essentially the same economic functions of allocating risk in the presence of futures

price uncertainty. However futures are a significant improvement over the forward contracts as

they eliminate counterparty risk and offer more liquidity. Comparison between two as follows.

FUTURES FORWARDS

1. Trade on an Organized Exchange. 1. OTC in nature.

2. Terms of the contracts differ from trade 2. Terms of the contracts are standardized.

to trade (tailor made contract) according

to the need of the participants.

3. Counter-party risk exists, but at times 3. Exists but the clearing agency associated

gets reduced by a guarantor with exchanges becomes the counter-

party to all trades assuring guarantee on

their settlement.

4. Liquidation is Low, as contracts are 4. High, as contracts are standardised

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 tailor made catering to the needs of the exchange-tradedcontracts.

parties involved. Further, contracts are

not easily accessible to other market

participants.

5. Price discovery Not Efficient, as 5. Efficient, centralised trading platform

markets are scattered helps all buyers and sellers to come

together and discover the price through

common order book.

6. Quality of information may be poor. 6. Futures are traded nationwide. Every bit

Speed of information dissemination is of decision related information is

week. distributed very fast.

7. Requires margin payment 7. Does not require margin payment

8. Follows daily settlement. 8. Settlement happens at end of period.

FEATURES OF FUTURES

 Futures are highly standardized.

 The contracting parties need not pay any down payment.

 Hedging of price risks.

 They have secondary markets to.

PARTIES IN THE FUTURES CONTRACT

There are two parties in a futures contract, the buyers and the seller. The buyer of the futures

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contract is one who is LONG on the futures contract and the seller of the futures contract is who

is SHORT on the futures contract.

The pay-off for the buyers and the seller of the futures of the contracts are as follow:

PAY-OFF FOR A BUYER OF FUTURES

P
PROFIT

E2
F E 1
LOSS

Fig source: NISM Equity Derivatives workbook

CASE 1:-The buyers bought the futures contract at (F); if the futures PriceGoes to E 1 then the

buyer gets the profit of (FP).

CASE 2:-The buyers gets loss when the futures price less then (F); if The Futures price goes to

E2 then the buyer the loss of (FL).

PAY-OFF FOR A SELLER OF FUTURES

F = FUTURES PRICE

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 P
PROFIT

E 2
E1 F

LOSS

Fig source: NISM Equity Derivatives workbook

E1, E2 = SETTLEMENT PRICE

CASE 1:-The seller sold the future contract at (F); if the future goes to E 1Then the seller gets

the profit of (FP).

CASE 2:-The seller gets loss when the future price goes greater than (F);If the future price

goes to E2 then the seller get the loss of (FL).

PRICING FUTURES

Pricing of futures contract is very simple. Using the cost-of-carry logic, we calculate the fair

value of a future contract. Every time the observed price deviates from the fair value, arbitragers

would enter into trades to captures the arbitrage profit. This in turn would push the futures price

back to its fair value. The cost of carry model used for pricing futures is given below.

F = SeRt

Where;

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 F = Futures price

S = Spot Price of the Underlying

r = Cost of financing (using continuously compounded Interest rate)

T = Time till expiration in years

e = 2.71828

(OR)

F = S (1+r- q) t

Where;

F = Futures price

S = Spot price of the underlying

r = Cost of financing (or) interest Rate

q = Expected dividend yield

t = Holding Period

FUTURES TERMINOLOGY

SPOT PRICE:

The price at which an asset trades in the spot market.

FUTURES PRICE:

The price at which the futures contract trades in the futures market.

CONTRACT CYCLE:

The period over which a contract trades. The index futures contracts on the NSE have one-

month and three-month expiry cycles which expire on the last Thursday of the month. Thus a

January expiration contract expires on the last Thursday of January and a February expiration

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contract ceases trading on the last Thursday of February. On the Friday following the last

Thursday, a new contract having a three-month expiry is introduced for trading.

EXPIRY DATE:

Is the date specified in the futures contract. This is the last day on which the contract will be

traded, at the end of which it will cease to exist.

CONTRACT SIZE:

The amount of asset that has to be delivered under one contract. For instance, the contract size

on NSE’s futures markets is 200 Nifties.

BASIS:

In the context of financial futures, basis can be defined as the futures price minus the spot price.

These will be a different basis for each delivery month for each contract. In a normal market,

basis will be positive. This reflects that futures prices normally exceed spot prices.

COST OF CARRY:

The relationship between futures prices and spot prices can be summarized in terms of what is

known as the cost of carry. This measures the storage cost plus the interest that is paid to finance

the asset less the income earned on the asset.

INITIAL MARGIN:

The amount that must be deposited in the margin account at the time a futures contract is first

entered into is known as initial margin.

MARKING-TO-MARKET:

In the futures market, at the end of each trading day, the margin account is adjusted to reflect the

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 investor’s gain or loss depending upon the futures closing price. This is called marking-to-

market.

MAINTENANCE MARGIN:

This is somewhat lower than the initial margin. This is set to ensure that the balance in the

margin account never becomes negative. If the balance in the margin account falls below the

maintenance margin, the investor receives a margin call and is expected to top up the margin

account to the initial margin level before trading commences on the next day.

INTRODUCTION TO OPTIONS

In this section, we look at the next derivative product to be traded on the NSE, namely options.

Options are fundamentally different from forward and futures contracts. An option gives the

holder of the option the right to do something. The holder does not have to exercise this right.

In contrast, in a forward or futures contract, the two parties have committed themselves to doing

something. Whereas it costs nothing (except margin requirement) to enter into a futures

contracts, the purchase of an option requires as up-front payment.

DEFINITIONOF OPTIONS

An Option is a contract that gives the right, but not an obligation, to buy or sell the underlying on

or before a stated date and at a stated price. While buyer of option pays the premium and buys

the right, writer/seller of option receives the premium with obligation to sell/ buy the underlying

asset, if the buyer exercises his right.

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PROPERTIES OF OPTION

Options have several unique properties that set them apart from other securities. The following

are the properties of option:

 Limited Loss

 High leverages potential

 Limited Life

PARTIES IN AN OPTION CONTRACT

There are two participants in Option Contract.

1. Buyer/Holder/Owner of an Option:

The Buyer of an Option is the one who by paying the option premium buys the right but not the

obligation to exercise his option on the seller/writer.

2. Seller/writer of an Option:

The writer of a call/put option is the one who receives the option premium and is thereby

obliged to sell/buy the asset if the buyer exercises on him.

TYPES OF OPTIONS

The Options are classified into various types on the basis of various variables. The following are

the various types of options.

1. On the basis of the underlying asset:

On the basis of the underlying asset the option are divided in to two types:

Index options:

These options have the index as the underlying. Some options are European while others are

American. Like index futures contracts, index options contracts are also cash settled.

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Stock options:

Stock Options are options on individual stocks. Options currently trade on over 500 stocks in the

United States. A contract gives the holder the right to buy or sell shares at the specified price.

2. On the basis of the market movements:

On the basis of the market movements the option are divided into two types. They are:

Call Option:

A call Option gives the holder the right but not the obligation to buy an asset by a certain date for

a certain price. It is brought by an investor when he seems that the stock price moves upwards.

Put Option:

A put option gives the holder the right but not the obligation to sell an asset by a certain date for

a certain price. It is bought by an investor when he seems that the stock price moves downwards.

3. On the basis of exercise of option:

On the basis of the exercise of the Option, the options are classified into two Categories.

American Option:

American options are the options that can be exercised at any time up to the expiration date.

Most exchange –traded options are American.

European Option:

European options are options that can be exercised only on the expiration date itself. European

options are easier to analyze than American options, and properties of an American option are

frequently deduced from those of its European counterpart.

PAY-OFF PROFILE FOR BUYER OF A CALL OPTION

The Pay-off of a buyer options depends on a spot price of an underlying asset. The following

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 graph shows the pay-off of buyers of a call option.

PROFIT
R

ITM

ATM E 1
OTM

E2 LOSS P

Fig source: NISM Equity Derivatives workbook

S= Strike price ITM = In the Money

Sp = premium/loss ATM = At the Money

E1 = Spot price 1 OTM = Out of the Money

E2 = Spot price 2

SR = Profit at spot price E1

CASE 1:(Spot Price > Strike price)

As the Spot price (E1) of the underlying asset is more than strike price (S).The buyer gets profit

of (SR), if price increases more than E1 then profit also increase more than (SR)

CASE 2:(Spot Price < Strike Price)

As a spot price (E2) of the underlying asset is less than strike price (S)The buyer gets loss of

(SP); if price goes down less than E2 then also his loss is limited to his premium (SP)

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PAY-OFF PROFILE FOR SELLER OF A CALL OPTION

The pay-off of seller of the call option depends on the spot price of the underlying asset. The

following graph shows the pay-off of seller of a call option:

PROFIT

P
ITM ATM

E 1 E 2
S
OTM

LOSS

Fig source: NISM Equity Derivatives workbook

S= Strike price ITM = In the money

SP = Premium / profit ATM = At the money

E1 = Spot Price 1 OTM = Out of the money

E2 = Spot Price 2

SR = Loss at spot price E2

CASE 1:(Spot price < Strike price)

As the spot price (E1) of the underlying is less than strike price (S). The seller gets the profit of

(SP), if the price decreases less than E1 then also profit of the seller does not exceed (SP)

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CASE 2: (Spot price > Strike price)

As the spot price (E2) of the underlying asset is more than strike price (S) the Seller gets loss of

(SR), if price goes more than E2 then the loss of the seller also increase more than (SR).

PAY-OFF PROFILE FOR BUYER OF A PUT OPTION

The Pay-off of the buyer of the option depends on the spot price of the underlying asset. The

following graph shows the pay-off of the buyer of a call option.

PROFIT
R

ITM
S
E 2
E1 ATM
OTM

P LOSS

Fig source: NISM Equity Derivatives workbook

S = Strike price ITM = In the money

SP = Premium / loss ATM =At the money

E1= Spot price 1 OTM = Out of the money

E2 = Spot price

2SR = Profit at spot price E1

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CASE 1:(Spot price < Strike price)

As the spot price (E1) of the underlying asset is less than strike price (S). The buyer gets the

profit (SR), if price decreases less than E1 then profit also increases more than (SR).

CASE 2:(Spot price > Strike price)

As the spot price (E2) of the underlying asset is more than strike price (S),

The buyer gets loss of (SP), if price goes more than E 2 than the loss of the buyer is limited to his

premium (SP).

PAY-OFF PROFILE FOR SELLER OF A PUT OPTION

The pay-off of a seller of the option depends on the spot price of the underlying asset. The

following graph shows the pay-off of seller of a put option.

PROFIT
P
ITM

E 1 ATM
E

OTM
S 2

LOSS

Fig source: NISM Equity Derivatives workbook

S = Strike price ITM = In the money

SP = Premium/profit ATM = At the money

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 E1 = Spot price 1 OTM = Out of the money

E2 = Spot price 2 SR = Loss at spot price E1

CASE 1:(Spot price < Strike price)

As the spot price (E1) of the underlying asset is less than strike price (S), the seller gets the loss

of (SR), if price decreases less than E1 than the loss also increases more than (SR).

CASE 2:(Spot price > Strike price)

As the spot price (E2) of the underlying asset is more than strike price (S), the seller gets profit of

(SP), of price goes more than E2 than the profit of seller is limited to his premium (SP).

PRICING OPTIONS

An option buyer has the right but not the obligation to exercise on the seller. The worst that can

happen to a buyer is the loss of the premium paid by him. His downside is limited to this

premium, but his upside is potentially unlimited. This optionality is precious and has a value,

which is expressed in terms of the option price. Just like in other free markets, it is the supply

and demand in the secondary market that drives the price of an option.

There are various models which help us get close to the true price of an option. Most of these

are variants of the celebrated Black- Scholes model for pricing European options.The Black-

Scholes formulas for the price of European calls and puts on a non-dividend paying stock are:

Call option:-

CA = SN (d1) – Xe- rT N (d2)

Put Option:-

PA = Xe- rT N (- d2) – SN (- d1)

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Where d1 = ln (S/X) + (r + v2/2) T

v√T

And d2= d1 - v√T

Where;

CA = VALUE OF CALL OPTION

PA = VALUE OF PUT OPTION

S = SPOT PRICE OF STOCK

N = NORMAL DISTRIBUTION

VARIANCE (V) = VOLATILITY

X = STRIKE PRICE

r = ANNUAL RISK FREE RETURN

T = CONTRACT CYCLE

e = 2.71828

r = ln (1 + r)

OPTIONS TERMINOLOGY

OPTION PRICE/PREMIUM:

Option price is the price which the option buyer pays to the option seller. It is also referred to as

the option premium.

EXPIRATION DATE:

The date specified in the options contract is known as the expiration date, the exercise date, the

strike date or the maturity.

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STRIKE PRICE:

The price specified in the option contract is known as the strike price or the exercise price.

IN-THE-MONEY OPTION:

An in-the-Money (ITM) option is an option that would lead to a positive cash flow to the holder

if it were exercised immediately. A call option on the index is said to be in-the-money when the

current index stands at a level higher than the strike price (i.e. spot price > strike price). If the

index is much higher than the strike price, the call is said to be deep ITM. In the case of a put,

the put is ITM if the index is below the strike price.

AT-THE- MONEY OPTION:

An at-the-money (ATM) option is an option that would lead to zero cash flow if it were

exercised immediately. An option on the index is at-the-money when the current index equals

the strike price (i.e. spot price = strike price).

OUT-OF-THE- MONEY OPTION:

An out-of-the-money (OTM) option is an option that would lead to a negative cash flow it was

exercised immediately. A call option on the index is out-of-the-the money when the current

index stands at a level which is less than the strike price (i.e. spot price < strike price). If the

index is much lower than the strike price, the call is said to be deep OTM. In the case of a put,

the put is OTM if the index is above the strike price.

INTRINSIC VALUE OF AN OPTION:

The option premium can be broken down into two components- intrinsic value and time value.

The intrinsic value of a call is the amount the option is ITM, if it is ITM. If the call is OTM, its

intrinsic value is zero.

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TIME VALUE OF AN OPTION:

The time value of an option is the difference between its premium and its intrinsic value. Both

calls and puts have time value. An option that is OTM or ATM has only time value. Usually, the

maximum time value exists when the option is ATM. The longer the time to expiration, the

greater is an option’s time value, all else equal. At expiration, an option should have no time

value.

30
 CHAPTER 2 - REVIEW OF LITERATURE

“Early forward contracts in the US addressed merchants concerns about ensuring that there were

buyers and sellers for commodities. However “credit risk” remained a serious problem. To deal

with this problem, a group of Chicago; businessmen formed theChicago Board of Trade (CBOT)

in 1848.

The primary intention of the CBOT was to provide a centralized location known In advance for

buyers and sellers to negotiate forward contracts. In 1865, the CBOT went one step further and

listed the first “exchange traded” derivatives Contract in the US; these contracts were called

“futures contracts”. In 1919, Chicago Butter and Egg Board, a spin-off CBOT was reorganized

to allow futures trading. Its name was changed to Chicago Mercantile Exchange(CME). The

CBOT and the CME remain the two largest organized futures exchanges, indeed the two largest

“financial” exchanges of any kind in the world today.

The first stock index futures contract was traded at Kansas City Board of Trade. Currently the

most popular stock index futures contract in the world is based on S&P 500index, traded on

Chicago Mercantile Exchange. During the Mid eighties, financial futures became the most

active derivative instruments Generating volumes many times more than the commodity futures.

Index futures, futures on T-bills and Euro-Dollar futures are the three most popular Futures

contracts traded today. Other popular international exchanges that trade derivatives are LIFFE in

England, DTB in Germany, SGX in Singapore, TIFFE in Japan, MATIF in France, Eurex etc.,

31
ARTICLE 1 - By Ashutosh Vashishtha

Development of Financial Derivatives Market in India

Risk is a characteristic feature of most commodity and capital markets. Variations in the prices

of agricultural and non-agricultural commodities are induced, over time, by demand-supply

dynamics. The last two decades have witnessed many-fold increase in the volume of

international trade and business due to the wave of globalization and liberalization sweeping

across the world. This has led to rapid and unpredictable variations in financial assets prices,

interest rates and exchange rates, and subsequently, to exposing the corporate world to an

unwieldy financial risk. In the present highly uncertain business scenario, the importance of risk

management is much greater than ever before. The emergence of derivatives market is an

ingenious feat of financial engineering that provides an effective and less costly solution to the

problem of risk that is embedded in the price unpredictability of the underlying asset. In India,

the emergence and growth of derivatives market is relatively a recent phenomenon. Since its

inception in June 2000, derivatives market has exhibited exponential growth both in terms of

volume and number of traded contracts. The market turn-over has grown from Rs.2365 crore in

2000-2001 to Rs. 11010482.20 crore in 2008-2009. Within a short span of eight years,

derivatives trading in India has surpassed cash segment in terms of turnover and number of

traded contracts. The present study encompasses in its scope an analysis of historical roots of

derivative trading, types of derivative products, regulation and policy developments, trend and

growth, future prospects and challenges of derivative market in India. Some space is devoted

also to a brief discussion of the status of global derivatives markets vis-a–vis the Indian

derivatives market.

32
ARTICLE 2 - K.Sunil

An Insight into Derivative Markets

The emergence of the market for derivatives 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. Derivatives are risk

management instruments, which derive their value from an underlying asset. The

following are three broad categories of participants in the derivatives market Hedgers,

Speculators and Arbitragers. Prices in an organized derivatives market reflect the perception of

market participants about the future and lead the price of underlying to the perceived future level.

In recent times the Derivative markets have gained importance in terms of their vital role in the

economy. The increasing investments in stocks (domestic as well as overseas) have attracted my

interest in this area. Numerous studies on the effects of futures and options listing on the

underlying cash market volatility have been done in the developed markets. The derivative

market is newly started in India and it is not known by every investor, so SEBI has to

take steps to create awareness among the investors about the derivative segment. In cash

market the profit/loss of the investor depends on the market price of the underlying asset. The

investor may incur huge profit or he may incur huge loss. But in derivatives segment the investor

enjoys huge profits with limited downside. Derivatives are mostly used for hedging purpose. In

order to increase the derivatives market in India, SEBI should revise some of their regulations

like contract size, participation of FII in the derivatives market. In a nutshell the study

throws a light on the derivatives market.

33
ARTICLE 3 - By Hemavathi P

A Study Of Indian Financial Derivatives Market and Its Position in Global Financial

Derivatives Market

The past decade has witnessed the multiple growths in the volume of international trade and

business due to the wave of globa lization and liberalization all over the world. As a result, the

demand for the international money and financial instruments incre ased significantly at the

global level. In this respect, change in exchange rates, interest rates and stock prices of different

financial markets have increased the fin ancial risk to the corporate world. Adverse changes have

even threatened the very survival of business world. it is, therefore, to manage such risk, the new

financial instruments have been developed in the financial markets, which are also popularly

known as financial derivatives,. The basic purpose of these instruments is to provide

commitments to prices for future dates for giving protection against adverse movements in future

prices, in order to reduce the exten t of financial risks. Today, the financial derivatives have

become increasingly popular and most commonly used in the world of fina nce. This has grown

with so phenomenal speed all over the world that now it is called as the derivatives revolution. In

India, the emergence and growth of derivatives market is relatively a recent phenomenon. Since

its inception in June 2000, derivatives m arket has exhibited exponential growth both in terms of

volume and number of contract traded. The market turnover has grown from Rs.2365 Cr. in 2000

-2001 to Rs.16807782.22 Cr. in 2012-13. W ithin a short span of twelve years, derivatives

trading in India has surpassed cash segment in terms of turnover and number of traded contracts.

The passed study encompasses in its scope, history, concept, definition, types, features,

34
regulation, market, trend, growth, Future prospects and challenges of derivatives in India and

status of Indian derivatives market vis-à-vis global derivative market. This paper tries to analyse

the impact of global financial crisis on the financial derivatives market in India. It is found that

the global financial crisis of 2008 has structur ally altered the composition of equity derivatives

market in India. The predominance of single stock futures as a derivative product has now been

replaced by the predominance of index option as a favorite derivative product in India. The

speculative nature of single stock futures had been the prime reason for the dominance of this

derivative product in the pre-crisis period. However, the cautious risk-aversion on the part of the

investor has now been the reason for the dominance of index options in the revised scenario.

Such over domination of particular derivative products is not a healthy sign for the derivatives

market in India

35
 CHAPTER-3 : COMPANY PROFILE

INDIABULLS
1. INTRODUCTION

Indiabulls is India’s leading Financial and Real Estate Company with a wide presence
throughout India. They ensure convenience and reliability in all their products and services.
Indiabulls has over 640 branches all over India. The customers of Indiabulls are more than
4,50,000 which covers from a wide range of financial services and products from securities,
derivatives trading, depositary services, research & advisory services, consumer secured &
unsecured credit, loan against shares and mortgage & housing finance. The company employs
around 4000 Relationship managers who help the clients to satisfy their customized financial
goals. Indiabulls entered the Real Estate business in the year 2005 with its group of companies.
Large scale projects worth several hundred million dollars are evaluated by them.
Indiabulls Financial Services Ltd is listed on the National Stock Exchange (NSE), Bombay
Stock Exchange (BSE) and Luxembourg Stock Exchange. The market capitalization of
Indiabulls is around USD 2500 million (29thDecember, 2006). Consolidated net worth of the
group is around USD 700 million. Indiabulls and its group companies have attracted USD 500
million of equity capital in Foreign Direct Investment (FDI) since March 2000. Some of the large
shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity
Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.

In middle of 1999, when e-commerce was just about starting in India, Sameer Gehlaut and his
close IIT Delhi friend Rajiv Rattan got together and bought a defunct securities company with a

36
NSE membership and started offering brokerage services . A Few months later, their friend
Saurabh Mittal also joined them. By December 1999, the company embarked on its journey to
build one of the first online platforms in India for offering internet brokerage services. In January
2000, the 3 founders incorporated Indiabulls Financial Services and made it as the flagship
company.

In mid 2000, Indiabulls Financial Services received venture capital funding from Mr L.N. Mittal
&Mr Harish Fabiani. In late 2000, Indiabulls Securities, a subsidiary of Indiabulls Financial
Services started offering online brokerage services and simultaneously opened physical offices
across India. By 2003, Indiabulls securities had established a strong pan India presence and client
base through its offices and on the internet.

In September 2004, Indiabulls Financial Services went public with an IPO at Rs 19 a share. In
late 2004, Indiabulls Financial Services started its financing business with consumer loans. In
March 2005, Indiabulls Properties Private Ltd, a subsidiary of Indiabulls Financial Services,
participated in government auction of Jupiter Mills, a defunct 11 acre textile mill owned by NTC
in Lower Parel, Mumbai. Indiabulls Properties private Ltd won the mill in auction and that
purchase started Indiabulls real estate business. A few months later, Indiabulls Real Estate
company pvt ltd bought Elphinstone mill in Lower Parel, another textile mill auctioned by NTC.

With real estate business gaining size, Indiabulls Financial Services demerged the real estate
business under Indiabulls Real Estate and each shareholder of Indiabulls Financial Services
received additional share of Indiabulls Real Estate through the demerger. Subsequently,
Indiabulls Financial Services also demerged Indiabulls Securities and each shareholder of
Indiabulls Financial Services also received a share of Indiabulls Securities.

In year 2014, Indiabulls Real Estate incorporated a 190% subsidiary, Indiabulls Power, to build
power plants and started work on building Nashik &Amrawati thermal power plants. Indiabulls
Power went public in September 2014.

Today, Indiabulls Group has a networth of Rs 16,796 Crore & has a strong presence in important
sectors like financial services, power & real estate through independently listed companies and
Indiabulls Group continues its journey of building businesses with strong cash flows.

37
MANAGEMENT TEAM

Indiabulls Group

 Mr Rajiv Rattan - Vice Chairman

 MrSaurabh Mittal - Vice Chairman
 MrGaganBanga - Group Spokesperson
 Mr Ashok Kacker - Group President
 MrSaketBahuguna - Group CLO
 Mr Ashok Sharma - Group CFO
 MrAjit Mittal - Group Director
 MrGurbans Singh - Group Director
 MrTejinderpal Singh Miglani - Group CIO

Indiabulls Financial Services Limited

 MrGaganBanga - CEO
 MrAshwini Kumar Hooda - DMD

Indiabulls Real Estate Limited

 MrVipul Bansal - CEO

 Mr Narendra Gehlaut - Joint MD

Indiabulls Power Limited

 MrRanjit Gupta - CEO

 MrMurali Subramanian - COO

Indiabulls Securities Limited

 MrDivyesh Shah - CEO

38
  Mr Vijay Babbar – DMD

Indiabulls supports Money life Foundation in Empowering Investors

“Moneylife Foundation”  in collaboration with Indiabulls, recently organized an ‘Investor,

Empower Yourself’ seminar, which was held at the lush Town & Country Club at New Gurgaon,
in the National Capital Region (NCR), on Saturday, 7th May 2011. This was the first occasion
for Moneylife Foundation to venture into other territories outside Maharashtra. Indiabulls played
a major role in helping this event happen successfully.

The event witnessed over 300 attendees not only from Gurgaon but also from other parts of
National Capital Region (NCR), Delhi, Allahabad, Ludhiana, Chandigarh & other cities from
northern region of India. The venue was fully packed with eager & curious investors. “Moneylife
Foundation” expressed its gratitude towards helpful team of Indiabulls led by Mr. GaganBanga,
CEO - Indiabulls Financial Services Ltd, for making this event such a huge success.

The event started with introductory remarks & guidance by Mr. GaganBanga, CEO - Indiabulls
Financial Services Ltd. Mr. Veeresh Malik, Consulting Editor, Moneylife, Delhi gave a brief
introduction about Moneylife Foundation.Then audience was guided by SuchetaDalal, Trustee -
Moneylife Foundation and Managing Editor- Moneylife, on How to be Safe with your
money&DebashisBasu, Trustee - Moneylife Foundation and Editor- Moneylife about How to be
smart with your investments. Mr. Sachin Choudhary, Director & Business Head - Indiabulls
Housing Finance Ltd, talked about Do's and Don’ts of Housing Mortgages. Ms. SuchetaDalal
also explained the importance & procedure of Wills & Nominations.

This event helped people in understanding how to become an aware and empowered investor.
The attendees included both finically literate & new investors. They posted number of intelligent
questions which were adequately answered by all the speakers. Empowering today’s investors by
creating awareness and guiding them in taking wise decisions when it comes to money or
investments was the main objective of ‘Investor, Empower Yourself’ seminar. During the Panel
Discussion with the panel members SuchetaDalal, DebashisBasu& Sachin Choudhary, quite a
few interesting & informative issues regarding Investments were discussed. Mr. MonuRatra,
National Sales Manager - Indiabulls housing Finance Ltd gave Vote of Thanks.

39
This event received many request and suggestions from audience about continuing with such
events all over India so that citizens of India will be more empowered investors & ultimately
nation will benefit from it. There were some requests from audience to telecast further events
live on television & internet so that those who are unable to attend the event will also get the
guidance. The knowledge shared about the investments during the event was well appreciated by
all.  

Moneylife Foundation has been instrumental in promoting financial literacy & pro-customer
advocacy in India.  Moneylife Foundation has been organizing such events at the Moneylife
Knowledge Centre in Mumbai, and also in various cities across Maharashtra. The Foundation
has completed 19 months of spreading financial literacy & has hosted around 49 speakers and 61
events. Currently, more than 5,000 people are members of the Foundation.

After the seminar, Indiabulls received feedbacks from some attendees congratulating Indiabulls’
team about the success of seminar. Many of the attendees mentioned that they are looking
forward to such seminars in future.

Indiabulls has been participating in such Corporate Social Activities with many other socially
aware groups and trusts &Indiabulls is committed to continue in doing so in future.

Businesses

Indiabulls Group is one of the country's leading business houses with business interests in
Power, Financial Services, Real Estate and Infrastructure .Indiabulls Group companies are listed
in Indian and overseas financial markets. The Net worth of the Group is Rs 16,796 Crore and the
total planned capital expenditure of the Group by 2014-19 is Rs 35,000 Crore.

Indiabulls Power is currently developing Thermal Power Projects with an aggregate capacity of
5400 MW. The first unit is expected to go on stream in May 2012. The net worth of Indiabulls
Power is Rs 3,917 Crore. The company has a total capital expenditure of Rs 27,500 Crore. The
company has been assigned 'BBB' rating.

40
Indiabulls Financial Services is one of India’s leading non-banking finance companies
providing Home Loans, Commercial Vehicle Loans and Secured SME Loans. The company has
a net worth of Rs 4,680 crore with an asset book of over Rs 18,500 Crore. The company has
disbursed loans over Rs 45,000 Crore to over 3,00,000 customers till date. Amongst its financial
services and banking peers, Indiabulls Financial Services ranks amongst the top few companies
both in terms of net worth and capital adequacy. Indiabulls Financial Services has been assigned
‘AA+’ rating and has presence in over 90 cities and towns with a total branch network of 190
branches.

Indiabulls Real Estate is among India's top Real Estate companies with development projects
spread across residential complexes, integrated townships, commercial office complexes, hotels,
malls, Special Economic Zones (SEZs) and infrastructure development. Indiabulls Real Estate
partnered with Farallon Capital Management LLC of USA to bring the first FDI into real estate
in the country. The company has a networth of Rs 7,953 Crore and has purchased prime land,
mostly in the metros and other Tier 1 cities worth Rs 4,000 Crore in government auctions alone.
Indiabulls Real Estate is currently developing 57 million sqft into premium quality, high-end
commercial, residential and retail spaces. The company has been assigned 'A+' rating.

Indiabulls Securities is one of India's leading capital markets companies providing securities
broking and advisory services. Indiabulls Securities also provides depository services, equity
research services and IPO distribution to its clients and offers commodities trading through a
separate company. These services are provided both through on-line and off-line distribution
channels. Indiabulls Securities is a pioneer of on-line securities trading in India. Indiabulls
Securities’ in-house trading platform is one of the fastest and most efficient trading platforms in
the country. Indiabulls Securities has been assigned the highest rating BQ-1 by CRISIL.

Indiabulls foundation

India has witnessed an economic transformation over the past two decades, translating into
higher incomes, better educational opportunities, improved infrastructure, a dynamic private
sector, and leadership in the global community. We have much to be proud of.

41
But we also recognize that we have a long way to go. Over 700 million people live under $2 a
day. Learning levels in schools remain abysmally low,  most of our rural population do not have
access to basic health care, regular electricity, clean water, and sanitation. India has some of the
world’s worst statistics on basic development indicators such as malnutrition, infant mortality,
and gender discrimination.

As a society, we are at the confluence of accelerated economic progress and extreme deprivation,
all in the same country, at the same time.

As corporate citizens, we at Indiabulls are conscious of the opportunities and the

responsibility that this confluence presents.

Investments to increase income levels of our poorest people will expand business opportunities
manifold. Investments to improve education, health and skills training will improve the
efficiency of the economy. Protecting our environment will actually lower our costs of doing
business. Providing our youth with gainful employment and a chance to improve their lives will
ensure societal and political stability- setting a strong foundation for economic sustainability. All
of these investments will help create an inclusive society, ensuring a sustainable return to our
shareholders.

The Indiabulls Group is keen to help in building an inclusive and prosperous society and we are
beginning our efforts in this direction through Indiabulls Foundation.

One of the first initiatives of the Foundation is to support the development of rural districts. Our
aim is to support development across multiple domains in a district based approach. Some of the
areas where we want to help are in economic development and skills training, access to drinking
water, school education, public health, agriculture and support to the local government.

Commercial Vehicle Loans

Indiabulls Commercial Vehicle Loans offers commercial auto loans to a variety of business
owners. We are a preferred financer with first time buyers as well as fleet operators providing
commercial vehicle loans with simple documentation and quick results.

42
 The Commercial Vehicle Finance provided by us helps the small and medium
operators to acquire vehicles with minimum hassle and documentation.We provide customized
financing options to suit your needs.Our strength lies in the quick completion of transactions,
long association with transporters and the intimate knowledge of the market and its nuances.Our
finance schemes are easy to understand with no hidden costs.

We assure you a quick, transparent and hassle-free deal.

1. Product Offering

 Finance for new commercial vehicles

 Finance for used vehicles
 Tractor Loans

2. Proposed Finance

 Tyre Funding
 Accidental Funding
 Engine Funding
 Take over loans
 Top up loan on existing loan with us

3. Features of Loan Offering

 Loan for up to 19 years old vehicles.

 The best loan offering in the market – up to 95% for used vehicles & 190% for new
commercial vehicle chassis
 Max tenure of upto 48 months for used vehicles 60 months for new commercial vehicle
chassis
 Max tenure of upto 48 months for used vehicles 60 months for new commercial vehicle
chassis
 Customized loan to suit your needs

43
  Door Step Services
 Easy Documentation
 Quick & Hassle free services
 Attractive Rate of Interest
 No intermediary or Direct Marketing Agent for loan processing

Organization Structure- Board of Directors:

Senior Vice President

Regional Manager

Branch Manager
Senior Sales Manager

Support System Sales Function

RM/SRM
Back Office Local Compliance
Executive Officer

ARM

Dealer
44
Trading Products of Indiabulls Securities

Indiabulls Securities
Trading Products

Cash Account Intraday Account Margin Trading

Indiabulls Securities provide three products for trading. They are

 Cash Account
 Intraday Account
 Margin Trading (Mantra)

Cash Account: It provides the client to buy 4 times of cash balance in his trading account.
Intraday Product: It provides the client to buy 8 times of his cash balance in the trading
account.
Mantra Account: Also called as margin trading, is a special account to buy on leverage for a
longer duration
Indiabulls Financial Services Ltd
Indiabulls Financial Services Ltd. was incorporated in the year 2005.The Auditors of Indiabulls
Financial Services Ltd. are Deloitte, Haskins & Sells. The main activity of this company is in

45
relation to securities and stock brokerage. It was also responsible for setting up one of India’s
first trading platforms.

The subsidiaries of Indiabulls Financial Services Ltd. include:

 Indiabulls Capital Services Ltd.
 Indiabulls Commodities Pvt. Ltd.
 Indiabulls Credit Services Ltd.
 Indiabulls Finance Co. Pvt. Ltd
 Indiabulls Housing Finance Ltd.
 Indiabulls Insurance Advisors Pvt. Ltd.
 Indiabulls Resources Ltd.
 Indiabulls Securities Ltd.

The Bankers of Indiabulls Financial Services Ltd. are as follows:

 ABN-Amro Bank
 Andhra Bank
 Bank of Maharashtra
 Bank of Rajasthan Ltd.
 Canara Bank
 Citibank
 Corporation Bank
 Dena Bank
 Indiabulls securities ltd
 HSBC Ltd.
 INDIABULLS Ltd.
 IDBI Ltd
 Industrial Bank Ltd.
 ING Vysya Bank Ltd
 Karnataka Bank
 Punjab National Bank

46
 State Bank Of India
 Syndicate Bank
 Union Bank Of India
 UTI Bank Ltd.
 INDIABULLS STOCK BROKING Ltd.

47
CHAPTER-4 : ANALYSIS &INTERPRETATION

DATA ANALYSIS

The Objective of this analysis is to evaluate the profit/loss position futures and options. This
analysis is based on sample data taken of BHEL&ONGC .Scrip. This analysis considered the 1st
APRIL 2019 TO 30th APRIL 2019 contract of BHEL&ONGC. The lot Size of BHEL is
1000&ONGC is 1000. The time period in which this analysis done is from 01-04-2019 to 30-04-
2019.

The following table explains the DATE and FUTURE PRICES.

 The first column explains TRADING DATE.

 Second column explains the FUTURE MARKET PRICE in cash segment
on that date.

48
BHEL FUTURE PRICE OF 1ST NOV 2020 TO 30TH NOV 2020

Date FUTURE

1-Nov-20 182.1

6-Nov-20 184.2

7-Nov-20 181.75

8- Nov-20 177.75

9- Nov-20 177.85

10- Nov-20 182.75

17- Nov-20 178

16- Nov-20 178.25

17- Nov-20 178.45

21- Nov-20 180.25

23- Nov-20 179

24- Nov-20 182.9

25- Nov-20 183.05

26- Nov-20 186.3

28- Nov-20 191.4

29- Nov-20 189

30- Nov-20 192.17

Data Source : Moneycontrol.com

49
 GRAPH SHOWS MOVEMENT OF FUTURE PRICES

FUTURE
195

190

185
FUTURE
180

175

170
9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9
pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1
A A A A A A A A A A A A A A A A A
1- 6 - 7- 8- 9 - 10 - 1 7 - 1 6 - 17 - 21 - 23 - 2 4 - 25 - 2 6 - 2 8 - 2 9 - 30 -

INTERPRETATION:-

In the above graph the future price curve shows An continuously fluctuating trend and at the end
of the month future prices closed at the price of Rs.192.17 with a Profit of Rs.10.05 (Rs.192.17-
182.10).to the buyer(long)and the seller(short)will incurr a loss of Rs.10.05.

FUTURE MARKET:-

SELLE
BUYER R
01/11/2020(BUYING) 182.1 182.1
30/11/2020(CLOSING PERIOD) 192.17 192.17
PROFIT 10.05 LOSS 10.05

PROFIT 10.05*1000= 10500/- LOSS 10.05*1000=10500/-

50
Because buyers Future Price increases so profits also increase. Seller future Price increases so he
will get loss. In case seller future price will decrease he will get profit.

The closing price of BHEL at the end of the contract period is192.17 and this is considered as
settlement price.The following table explains the DATE and MARKET PRICES.

The first column explains TRADING DATE

Second column explains the MARKET PRICE in cash segment on that date.

BHEL SPOT PRICE 1ST NOV 2020 TO 30TH NOV 2020

DATE SPOT
1-Nov-20 182.5
6- Nov-20 185.1
7- Nov-20 182.8
8- Nov-20 178.17
9- Nov-20 177.8
10- Nov-20 182.5
17- Nov-20 178.75
16- Nov-20 177.9
17- Nov-20 178.25
21- Nov-20 179.6
23- Nov-20 178.35
24- Nov-20 182.3
25- Nov-20 183.35
26- Nov-20 185.85
28- Nov-20 191.35
29- Nov-20 188.7
30- Nov-20 192.55

GRAPH SHOWS MOVEMENT OF SPOT PRICES

51
 SPOT
195

190

185
SPOT
180

175

170
9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9
pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1
A A A A A A A A A A A A A A A A A
1- 6- 7 - 8 - 9 - 1 0 - 17 - 16 - 1 7 - 2 1 - 2 3 - 24 - 2 5 - 2 6 - 2 8 - 29 - 30 -

Data Source : Moneycontrol.com

INTERPRETATION:-

In the above graph the spot price curve shows an increasing trend and at the end
of the month Spot prices settled at the price of Rs.192.55 and buyer made a profit of Rs.10.05.

SPOT MARKET:-

SELLE
BUYER R
01/11/2020(BUYING) 182.5 182.5
30/11/2020(CLOSING PERIOD) 192.55 192.55
LOSS 10.05 PROFIT 10.05

LOSS 10.5*1000= 10500/- PROFIT 10.5*1000=10500/-

The following table explains the DATE and MARKET PRICES.

 The first column explains TRADING DATE.

52
  Second column explains the FUTURE PRICE in cash segment on that date

 Third column explains the MARKET PRICES in cash segment on that date

BHEL FUTURE PRICE & SPOT PRICE COMPARISION1ST NOV 2020 TO

30TH NOV 2020

DATE FUTURE SPOT

1- Nov-20 182.1 182.5
6- Nov-20 184.2 185.1
7- Nov-20 181.75 182.8
8- Nov-20 177.75 178.17
9- Nov-20 177.85 177.8
10- Nov-20 182.75 182.5
17- Nov-20 178 178.75
16- Nov-20 178.25 177.9
17- Nov-20 178.45 178.25
21- Nov-20 180.25 179.6
23- Nov-20 179 178.35
24- Nov-20 182.9 182.3
25- Nov-20 183.05 183.35
26- Nov-20 186.3 185.85
28- Nov-20 191.4 191.35
29- Nov-20 189 188.7
30- Nov-20 192.17 192.55

GRAPH SHOWS MOVEMENT OF FUTURE PRICE & SPOT PRICES

53
 195

190

185

180 Series1
Series2
175

170
9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9
pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1
A A A A A A A A A A A A A A A A A
1- 6 - 7 - 8 - 9- 1 0 - 1 7 - 16 - 17 - 21 - 2 3 - 2 4 - 2 5 - 26 - 28 - 29 - 3 0 -

INTERPRETATION:-
The above graph shows the price movements of futures and spot prices. The future prices moves
along with the spot prices as per the trend i.e, the opening prices of futures is Rs.182.1 and the
spot price is Rs.182.5 and at the end of the month last Thursday the future price closed or settled
at the price or Rs.192.17 and the spot price settled at the price of Rs. 192.55 with a profit of
Rs.10.05 and Rs.10.05 respectively on 30th NOV 2020.

BHEL CALL PRICE FOR 180,185,190,195,200.

54
 PRICE PREMIUM

DATE FUTURE SPOT 180 185 190 195 200

1-Nov-20 182.1 182.5 8.1 5.75 4 2.8 1.95
6- Nov-20 184.2 185.1 8.9 6.25 4.3 3 2
7- Nov-20 181.75 182.8 7.25 5.17 3.5 2.1 1.65
8- Nov-20 177.75 178.17 5.55 3.8 2.5 1.65 1.17
9- Nov-20 177.85 177.8 5.5 3.45 2.45 1.55 1.1
10- Nov-20 182.75 182.5 7.65 5.2 3.55 2.17 1.4
17- Nov-20 178 178.75 4.8 3.05 1.95 1.2 0.8
16- Nov-20 178.25 177.9 4.6 2.9 1.8 1.05 0.75
17- Nov-20 178.45 178.25 4.3 2.55 1.55 0.9 0.6
21- Nov-20 180.25 179.6 4.75 2.8 1.65 0.95 0.6
23- Nov-20 179 178.35 3.9 2.25 1.25 0.7 0.4
24- Nov-20 182.9 182.3 5.7 3.2 1.75 0.85 0.55
25- Nov-20 183.05 183.35 5.35 2.85 1.45 0.65 0.45
26- Nov-20 186.3 185.85 7.25 3.9 1.75 0.8 0.4
28- Nov-20 191.4 191.35 11.35 6.5 3.2 1.2 0.45
29- Nov-20 189 188.7 9.2 4.3 1.4 0.35 0.17
30- Nov-20 192.17 192.55 11 5.75 1.9 0.17 0.05

GRAPH SHOWS MOVEMENT AT PREMIUM OF 180,185,190,195,200.

55
 250

200

150 PRICE
Series2
100 PREMIUM
Series4
Series5
50 Series6
Series7
0
TE -19 -19 -19 -19 -19 -19 -19 -19 -19 -19 -19 -19 -19 -19 -19 -19 -19
DA pr pr pr pr pr pr pr pr pr pr pr pr pr pr pr pr pr
A A A A A A A A A A A A A A A A A
1 - 6- 7 - 8- 9 - 1 0 - 17 - 16 - 17 - 2 1 - 2 3 - 24 - 25 - 26 - 2 8 - 29 - 3 0 -

BUYERS PAY OFF:-

He bought 1(1000) lot of BHEL at the strike price of 180 with a premium of Rs: 8.1 per
share.Settlement price is 192.55.

Strike price 180

Add: Premium 8.1

BEP 188.10
Less Spot price 192.55
PROFITS 4.45/-
PROFITS4.45*1000= 4450/-

Because it is positive so buyer gets profit. In case decrease in market price the buyer of the call
will lose the premium only i.e. 4.45*1000= 4450/-

SELLERS PAY OFF:-

As it is out f the money for seller: hence his loss

56
 LOSS 4.45*1000=4450/-
Because it is negative, and the price in market continuously up so the seller will get loss.

BHEL PUT PRICE FOR 175,170,165,160,175.

PRICE PREMIUM
DATE FUTURE SPOT 175 170 165 160 175
1-Nov-20 182.1 182.5 3.7 2.5 1.45 0.85 0.35
6- Nov-20 184.2 185.1 3 1.9 1.1 0.85 0.35
7- Nov-20 181.75 182.8 4 2.25 0.85 0.75 0.35
8- Nov-20 177.75 178.17 5.2 3.35 2.2 1.25 0.35
9- Nov-20 177.85 177.8 5.17 3.4 1.85 1.25 0.35
10- Nov-20 182.75 182.5 3.1 1.95 1.17 0.7 0.35
17- Nov-20 178 178.75 4.3 2.65 1.65 1.05 0.35
16- Nov-20 178.25 177.9 4 2.3 1.7 0.7 0.35
17- Nov-20 178.45 178.25 3.4 1.95 1.05 0.75 0.35
21- Nov-20 180.25 179.6 2.5 1.4 0.75 0.55 0.35
23- Nov-20 179 178.35 2.8 1.5 0.7 0.65 0.35
24- Nov-20 182.9 182.3 1.5 0.8 0.3 0.25 0.35
25- Nov-20 183.05 183.35 1.1 0.6 0.2 0.25 0.35
26- Nov-20 186.3 185.85 0.55 0.3 0.2 0.1 0.35
28- Nov-20 191.4 191.35 0.2 0.17 0.1 0.05 0.35
29- Nov-20 189 188.7 0.17 0.1 0.05 0.05 0.35
30- Nov-20 192.17 192.55 0.05 0.05 0.05 0.05 0.35

GRAPH SHOWS MOVEMENT AT PREMIUM OF 175,170,165,160,175.

57
 250

200

150 PRICE
Series2

100 PREMIUM
Series4
Series5
50
Series6
Series7
0
TE -19 -19 -19 -19 -19 -19 -19 -19
DA pr r r r r r r r
A Ap Ap Ap Ap Ap Ap Ap
6- 8- 1 0 - 16 - 21 - 24 - 26 - 29 -

Data Source : Moneycontrol.com

BUYERS PAY OFF:-

He bought 1(1000) lot of BHEL at the strike price of 175 with a premium of Rs:3.7per share.
Settlement price is 192.55

Strike price 175

LESS: Premium 3.7

BEP 171.30

Less Spot price 192.55

LOSS -21.25

LOSS 3.7*1000= 3700/-

Because it is positive so buyer gets profit. In case decrease in spot price the buyer of the put will
loss the premium only i.e. 3.7*1000= 3700/-

SELLERS PAY OFF:-

58
 As it is in the money for seller: hence his loss is.
PROFIT:3.
7 *1000= 3700/-

Because it is negative, and the price in market continuously down so the seller will get loss.

The following table explains the DATE and MARKET PRICES.

 The first column explains TRADING DATE.
 Second column explains the FUTURE PRICE in cash segment on that date.
 Third column explains the MARKET PRICES in cash segment on that date.

ONGC FUTURE PRICE OF 1ST NOV 2020 TO 30TH NOV 2020

DATE FUTURE
1-Nov-20 309.95
6- Nov-20 318
7- Nov-20 311.05
8- Nov-20 308.5
9- Nov-20 314.9
10- Nov-20 313.55
17- Nov-20 303.85
16- Nov-20 303.2
17- Nov-20 306.95
21- Nov-20 308.95
23- Nov-20 319.8
24- Nov-20 332.05
25- Nov-20 328.8
26- Nov-20 334.7
28- Nov-20 328.55
29-Nov-20 326.85
30-Nov-20 326.35

59
 GRAPH SHOWS MOVEMENT ONGC FUTURE PRICE

FUTURE
340

330

320

310
FUTURE
300

290

280
9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9
pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1
A A A A A A A A A A A A A A A A A
1- 6 - 7- 8 - 9- 10 - 1 7 - 16 - 1 7 - 21 - 2 3 - 24 - 2 5 - 26 - 28 - 2 9 - 30 -

Data Source : Moneycontrol.com

INTERPRETATION:-

In the above graph the future price curve shows an continuous fluctuations and at the
end of the month future prices is closed at the price of Rs.326.35 with a profit of Rs.16.4(309.95-
326.35).

FUTURE MARKET:-

BUYER SELLER
01/04/2019(BUYING) 309.95 309.95
30/04/2019(CLOSING PERIOD) 326.35 326.35
PROFIT 16.4 LOSS 16.4

PROFIT 16.4*1000= 16400/- LOSS 16.4*1000=16400/-

60
Because Buyers Future Price increase so profit also increase. Seller future Price also increase so
he will get loss. Incase seller future will decrease he will get profits.

The closing price of ONGC at the end of the contract period is 326.35 and this is considered as
settlement price.

The following table explains the DATE and MARKET PRICES.

The first column explains TRADING DATE

Second column explains the MARKET PRICE in cash segment on that date.

ONGC SPOT PRICE FROM 1ST APR 2019 TO 30TH APR 2020

DATE SPOT
1-Apr-19 308.85
6-Apr-19 317.2
7-Apr-19 310.55
8-Apr-19 307.65
9-Apr-19 314.3
10-Apr-19 312.85
17Apr-19 303.8
16-Apr-19 302.9
17-Apr-19 307.25
21-Apr-19 308.8
23-Apr-19 319
24-Apr-19 331.9
25-Apr-19 328.85
26-Apr-19 334.35
28-Apr-19 328.05
29-Apr-19 326.45

61
 30-Apr-19 326.5

Data Source : Moneycontrol.com

GRAPH SHOWS MOVEMENT ONGC SPOT PRICE

SPOT
340

330

320

310
SPOT
300

290

280
9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9
pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1 pr-1
A A A A A A A A A A A A A A A A A
1- 6- 7 - 8 - 9 - 1 0 - 17 - 16 - 1 7 - 2 1 - 2 3 - 24 - 2 5 - 2 6 - 2 8 - 29 - 30 -

Data Source : Moneycontrol.com

INTERPRETATION:-

In the above graph the spot price curve shows an increasing trend and at the end
of the month Spot prices settled at the price of Rs.326.5 with a profit of Rs.17.6 (308.9-326.5)

SPOT MARKET:-
SELLE
BUYER R
01/04/2019(BUYING) 308.9 308.9
30/04/2019(CLOSING PERIOD) 326.5 326.5
profit 17.6 loss 17.6

62
profit 17.6*1000=17600/- loss 17.6*1000=17600/-

The following table explains the DATE and MARKET PRICES.

 The first column explains TRADING DATE.

 Second column explains the FUTURE PRICE in cash segment on that date.

 Third column explains the MARKET PRICES in cash segment on that

date.

ONGC FUTURE & SPOT PRICE FROM 1ST APR 2019 TO 30TH APR 2019

DATE FUTURE SPOT

1-Apr-19 309.95 308.85
6-Apr-19 318 317.2
7-Apr-19 311.05 310.55
8-Apr-19 308.5 307.65
9-Apr-19 314.9 314.3
10-Apr-19 313.55 312.85
17Apr-19 303.85 303.8
16-Apr-19 303.2 302.9
17-Apr-19 306.95 307.25
21-Apr-19 308.95 308.8
23-Apr-19 319.8 319
24-Apr-19 332.05 331.9
25-Apr-19 328.8 328.85
26-Apr-19 334.7 334.35

63
 28-Apr-19 328.55 328.05
29-Apr-19 326.85 326.45
30-Apr-19 326.35 326.5

Data Source : Moneycontrol.com

GRAPH SHOWS COMPARISION BETWEEN FUTURE PRICE & SPOT

PRICE

340

330 Data Source : Moneycontrol.com

320

INTERPRETATION:-
310
FUTURE
300 SPOT
The above graph
290 shows the price movements of futures and spot prices. The future prices moves
along with the spot prices in increasing trend i.e, the opening prices of futures is Rs.309.95 and
the spot price280
is Rs.308.9 and at the end of the month last Thursday the future price closed at the
price or Rs. 326.359 and 9 the
9 market
9 9 9price settled at the price of Rs.326.5 with a profit of Rs.16.4
r -1 respectively
r 19 r-19 r-19 r-19 r-19 r-19 r-19 r-19 r-19 r-19 r-19
-1 r-1 r-1 r-1onr-130r-TH
and Rs. 17.6 profit APR 2019.
Ap Ap -Ap -Ap -Ap -Ap -Ap -Ap -Ap -Ap -Ap -Ap -Ap -Ap -Ap -Ap -Ap
1- 6-ONGC 7 8 9 CALL 0 7
1 1 1PRICE 6 7 1
1 2 2FOR 3 24 2300,310,320,330,340
5 26 28 2 9 30 .

64
 PRICE PREMIUM
FUTUR
DATE E SPOT 300 310 320 330 340
1-Apr-19 309.95 308.85 14.8 9.4 5.4 3 1.65
6-Apr-19 318 317.2 20.17 12.9 7.85 4.3 2.35
7-Apr-19 311.05 310.55 14.55 8.45 5.17 2.65 1.4
8-Apr-19 308.5 307.65 12.5 7.55 4 2 1.1
9-Apr-19 314.9 314.3 17.65 11.05 6.25 3.35 1.65
10-Apr-19 313.55 312.85 17.9 10.17 5.55 2.85 1.35
17Apr-19 303.85 303.8 10.45 5.75 3 1.55 0.8
16-Apr-19 303.2 302.9 9.45 5.05 2.55 1.17 0.75
17-Apr-19 306.95 307.25 10.9 5.8 2.85 1.35 0.7
21-Apr-19 308.95 308.8 11.8 6.17 3 1.2 0.6
23-Apr-19 319.8 319 20.05 12.95 6.8 3.3 1.45
24-Apr-19 332.05 331.9 32.2 22.5 14.45 7.85 3.7
25-Apr-19 328.8 328.85 30.1 21.95 12.55 5.85 2.25
26-Apr-19 334.7 334.35 34.05 24.75 17.55 8.05 3.17
28-Apr-19 328.55 328.05 28.4 22 9.4 3.17 0.9
29-Apr-19 326.85 326.45 22.5 13.2 7.2 1.7 0.17
30-Apr-19 326.35 326.5 22.5 17 5.9 0.17 0.05

GRAPH SHOWS MOVEMENT AT PREMIUM 300,310,320,330,340.

400
350
300
250 PRICE
Series2
200
150 PREMIUM
Series4
100 Series5
Series6
50
Series7
0
TE -19 -19 -19 -19 -19 -19 -19 -19
DA pr r r r r r r r
A Ap Ap Ap Ap Ap Ap Ap
6- 8- 1 0 - 1 6 - 21 - 24 - 26 - 29 -

Data Source : Moneycontrol.com

BUYERS PAY OFF:-

65
 He bought 1(1000) lot of ONGC at the strike price of 300 with a premium of Rs:14.80 per
share.Settlement price is Rs. 326.50
Strike price 300
Add: Premium 14.80
BEP 314.80
Less Spot price 326.50

profit 11.70

Profit 11.70*1000= 11700/-

Because it is posative so buyer gets profit. In case decrease in market price the buyer of the call
will get the premium only i.e.. 11.70*1000= 11700/-

SELLERS PAY OFF:-

As it is out OF the money for seller: hence his loss

is.
loss 11.70*1000=11700/-

Because it is negative, and the price in market continuously down so the seller will get loss.

ONGC PUT PRICE FOR 320,310,300,290,280.

PRICE PREMIUM

DATE FUTURE SPOT 320 310 300 290 280

1-Apr-19 309.95 308.85 17.5 9.05 5.05 2.6 1.2

66
 6-Apr-19 318 317.2 9.8 5.45 2.65 1.55 0.65
7-Apr-19 311.05 310.55 13.55 7.85 3.65 1.85 0.85
8-Apr-19 308.5 307.65 17.65 9 4.8 2.25 1.05
9-Apr-19 314.9 314.3 11.7 6.4 3.2 1.4 0.65
10-Apr-19 313.55 312.85 11.85 6.6 3.25 1.55 0.7
17Apr-19 303.85 303.8 19.3 11.7 6.4 3.1 1.4
16-Apr-19 303.2 302.9 19.6 10.75 6.25 3 1.25
17-Apr-19 306.95 307.25 17.35 8.6 3.95 1.65 0.8
21-Apr-19 308.95 308.8 13.45 7.25 3.05 1.25 0.7
23-Apr-19 319.8 319 6.95 3.1 1.17 0.5 0.35
24-Apr-19 332.05 331.9 2.7 1.05 0.5 0.35 0.2
25-Apr-19 328.8 328.85 3.17 1.2 0.5 0.3 0.2
26-Apr-19 334.7 334.35 1.2 0.35 0.1 0.17 0.05
28-Apr-19 328.55 328.05 1.25 0.2 0.17 0.17 0.05
29-Apr-19 326.85 326.45 0.6 0.1 0.05 0.05 0.05
30-Apr-19 326.35 326.5 0.17 0.05 0.05 0.05 0.05

GRAPH SHOWS MOVEMENT OF PUT PRICE AT PREMIUM OF 320,310,300,290,280.

67
 400
350
300
250
PRICE
200 Series2
PREMIUM
150 Series4
100 Series5
Series6
50 Series7
0
TE -19 -19 -19 -19 -19 -19 -19 -19
DA pr r r r r r r r
A Ap A p A p A p A p A p A p
6- 8- 10 - 16 - 2 1 - 24 - 2 6 - 2 9 -

Data Source : Moneycontrol.com

BUYERS PAY OFF:-

He bought 1(1000) lot of ONGC at the strike price of 320 with a premium of Rs:17.50 per
share.Settlement price is Rs. 326.5
Strike price 320
Add: Premium 17.50
BEP 304.50
Less Spot price 326.5

LOSS 22

LOSS17.50*1000=17500/-

Because it is positive so buyer gets profit. In case decrease in market price the buyer of the call
will get the premium only i.e. 17.50*1000= 17500/-

SELLERS PAY OFF:-

As it is out of the money for seller: hence his loss is.

PROFIT

68
 17.50*1000=175
00/-

Because it is negative, and the price in market continuously down so the seller will get los

CHAPTER-5

FINDINGS, SUGGESTIONS, LIMITATIONS

&

CONCLUSIONS

FINDINGS

 The future price of BHEL,ONGC is moving along with the market price.

 If the buying price of the future is less than the settlement price, than the buyer of a future

gets profit.

69
  If the selling price of the future is less than the settlement price, than the seller incur

losses.

 As above BHEL,ONGC given losses ,given profits

 Cost of carry model and Interest rate parity model are useful tools to find out standard
future price and also useful for comparing standard with actual future price. And it’s
also a very help full in Arbitraging.

 New concept of Exchange traded currency future trading is regulated by higher authority
and regulatory.

 The whole function of Exchange traded currency future is regulated by SEBI/RBI, and
they established rules and regulation so there is very safe trading is emerged and counter
party risk is minimized in currency Future trading. And also time reduced in Clearing and
Settlement process up to T+1 day’s basis.

 Larger exporter and importer has continued to deal in the OTC counter even exchange
traded currency future is available in markets because,

 There is a limit of USD 100 million on open interest applicable to trading member who
are banks. And the USD 25 million limit for other trading members so larger exporter and
importer might continue to deal in the OTC market where there is no limit on hedges.

 In India RBI and SEBI has restricted other currency derivatives except Currency future,
at this time if any person wants to use other instrument of currency derivatives in this
case he has to use OTC.

SUGGESTIONS

70
  The derivative market is newly started in India and it is not known by every

investor, so SEBI has to take steps to create awareness among the investors about

the derivative segment.

 In order to increase the derivatives market in India, SEBI should revise some of

their regulations like contract size, participation of FII in the derivatives market.

 Contract size should be minimized because small investors cannot afford this

much of huge premiums.

 SEBI has to take further steps in the risk management mechanism.

 SEBI has to take measures to use effectively the derivatives segment as a tool of

hedging.

CONCLUSION

 In bullish market the call option writer incurs more losses so the investor is suggested to

go for a call option to hold, where as the put option holder suffers in a bullish market, so

he is suggested to write a put option.

 In bearish market the call option holder will incur more losses so the investor is

suggested to go for a call option to write, where as the put option writer will get more

losses, so he is suggested to hold a put option.

 In the above analysis the market price of BHEL,ONGC is having high volatility, so the

call option writer enjoys more losses to holders.

71
BIBILOGRAPHY

 Kolb, V. R.. (1997). Understanding futures market (3rded.). New Delhi: Prentice Hall of
India Pvt Ltd.
 Patwari, D. C., & Bhargava, A. (2005). Options and Futures – An Indian perspective
(3rded.). Jaico publishing house.
 Aravjo. et. al. (2007). Alternative hedge models for the Brazilian Exchange market: A
comparative analysis. The ICFAI Journal of Applied Economics, Vol VI, No 5, 45- 69.
 Azizan, A. N. (2008). The predictability power of trading volume volatility in stock index
futures market. Journal of derivatives market ,Vol 5 , No 3, 72-90.
 Bali, G. T., & Hume, R. S (2007). A new look at hedge with derivatives- Will firms
reduce market risk exposure. Journal of futures market, Vol 27, No 11, 1053-1083

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 Chathurvedulla, C. (2007). Put Call parity: Arbitrage opportunities in Nifty index options
market. ICFAI Journal of Financial Risk Management, Vol 4, No 3, 2-9.
 Gupta, S., & Sahi, A. (2006). Financial Derivatives: Concepts and Trends. The ICFAI
Journal of Derivatives Market, Vol 3,No 4,62-68.
 Hin, J., & Ritchken, P. (2006). On pricing derivatives in the presence of Auxillary state
variables. Journal of Derivatives , Vol 14,Issue 2 , 29-46.
 Financial Market and Services (2009) - GORDAN & NATRAJAN
 Financial Management (2011)- PRASNNA CHANDRA
 Risk management (2009) -DR.G.KOTRESHWAR
 NEWS PAPERS :Economic times, Times of India, Business Line
 MAGAZINES :Business Today, Business India
 WEBSITES :www.derivativesindia.com, www.nseindia.com, www.bseindia.com,
www.sebi.gov.in, www.moneycontrol.com

73