Options as a Strategic Investment » Online Trading

Online Tutorial About Indian Stock Market â Indiaâs Nse & Bse Share Markets

admin — Wed, 20 Jan 2010 23:17:40 +0000

THE NATIONAL STOCK EXCHANGE OF INDIA (NSE) Located in Indiaâs financial capital Mumbai, the National Stock Exchange (NSE) is the third largest stock exchange in the world. During 31 December 2005, NSE VSAT terminals, 2799 in total, were spanning across 320 cities of India. The NSE has been a podium for securities exchange for 14 years now! Thousand member strong, NSE provides dealing of different securities, some of them being equity, corporate debt, certificate of deposit, commercial paper, and central and state government securities. National Securities Clearing Corporation, India Index Services and Products, National Securities Depository, and NSE-IT (trading technology) are the associates of NSE. Owner of diverse financial and insurance establishments, NSE can be broadly divided into three segments:

GENESIS OF NSEIt all began 16 years back, in November 1992, when the NSE was integrated as a tax-paying company. In April 1993, NSE was given the status of a stock exchange under the Securities Contract (Regulations) Act of 1956. A year later, in June 1994, NSE began operations in the Wholesale Debt Market (WDM), and in November that year, the Capital Market (Equities) Segment of the NSE began operations. Two years hence, in 1996, NSE became the first exchange in India to trade derivatives specifically on an equity index. In the new millennium, NSE began Indian Internet Online trading system. Today the NSE deals in online examinations and award certification. Comprising branches all over India, NSE introduced Indiaâs first clearing corporation (National Securities Clearing Corporation Ltd.) and Indiaâs first depository (National Securities Depository Ltd.). NSE is Indiaâs earliest national, anonymous, electronic limit order book (LOB) exchange that deals with securities.

MARKET INDICESNSE established an index services firm called IISL â India Index Services and products Ltd. â and opened numerous stock indices, including:

The other NSE Indices are:

MARKET CAPITALISATIONCurrently, NSE has four important capital market segments:

MAJOR COMPANIES OF NSEThe major companies listed with the NSE are:

The top investors of NSE are:

LOCATION OF NSENational Stock Exchange of India Ltd.Exchange PlazaPlot No. C/1, G BlockBandra-Kurla ComplexBandra (E)Mumbai 400051

BOMBAY STOCK EXCHANGE (BSE)

Having its headquarters in Mumbai, the BSE SENSEX is the stock index or SENSitive indEX of the BSE. The oldest stock exchange of Asia, the BSE SENSEX, also known as BSE 30, is the focal stock index of India. There are 4800 companies listed with the BSE. As of July 2007, the total equity market capitalization of the Bombay Stock Exchange was US$ 1.005 trillion. The Singapore Exchange has become an alliance of BSE by acquiring a strategic investment in the BSE.

GENESIS OF BSE

Way back in 1986, the BSE introduced the stock index that eventually became the most important stock index of the country. The SENSEX was based on market-capitalisation-weighted method and included stocks of some of the top financial houses. Noted financial analyst and columnist, Mr. Deepak Mohoni in the year 1990, introduced the term âBSE SENSEXâ which is an acronym for Bombay Stock Exchange SENSitive indEX. Since September 2003, the SENSEX is measured on the method of free-float capitalisation.

MARKET INDICES

Apart from maintaining the BSE SENSEX, the Bombay Stock Exchange also maintains stock indices like:

The BSE gives information on the price, charting, announcements, company contact, shareholding pattern and results of the companies that are enlisted in the exchange. The Board of Directors, encompassing eminent financial professionals, Managing Director of the exchange, and the representatives of the Trading Members, maintain the overall functionality of the exchange.

BSE also gives the Beta value of the SENSEX Scrips, Beta being calculated by the formula: Beta = Co-Variance (SENSEX, Stock)/Variance (SENSEX).

While listing securities that may be from public limited companies, central government, state governments or other financial institutions, there are certain objectives followed by the BSE:

BSE SENSEX OVERVIEW

The BSE SENSEX comprises thirty stocks and is a value-weighted index. The stocks listed here are the most active stocks on the BSE. The BSE SENSEX has a base value of 100. The relevant authorities update BSE SENSEX and in the process inspect and change the SENSEX, the underlying idea being that the SENSEX represents the prevailing market condition.

BSE PERFORMANCE

Since June 1990, the BSE Index has been increasing ten-fold. As per the data available, since April 1979, the long run rate of return on the BSE SENSEX has been at almost 0.52% every week, with the rate of standard deviation being almost 3.67%. The returns thus have been 27% per year. However after inflation, the figure has come down to 18% per year.

BSE COMPANIES

Given below is a catalogue of stocks listed in the BSE:

So You Think You Know Option Trading?

admin — Wed, 20 Jan 2010 11:23:59 +0000

We all know that many opportunities exist in Option Trading today. Wherever you turn, someone is waiting to inform you of the tremendous profits to be realized within the stock and the futures markets. Nevertheless, many people are unaware of the derivative trading possibilities that are available within and across several different markets.
Option Trading is just one of the leading many ways to participate in such type of secondary markets. And in contrast to the popular belief, this potential trading arena is not limited strictly to the practice of selling or writing options.
Option Trading is an important element of investing in markets, serving a function of managing risk and generating income too.
Contrasting to most other types of investments today, Option Trading provides a unique set of benefits to its clients. Not only does Option Trading provide an economical and effective means of hedging one’s portfolio against adverse and unexpected price fluctuations, but it also offers a tremendous exploratory dimension to trading.
One of the foremost primary conveniences of Option Trading is that an option contracts enable a trade to be leveraged, allowing the trader to control the full value of an asset for a fraction of the actual cost.
Then since an option’s price mirrors that of the underlying asset at the very least, any constructive return element within the asset will be met with a greater percentage return resource within the option provides limited risk and unlimited reward.
With Option Trading the buyer can only lose what was paid for the option contract, and not a penny more, which is a fraction of what the actual cost of the asset would be. However, the profit potential is unlimited because in Option Trading the option holder possesses a contract that performs in sync with the asset itself.
If the outlook turns out to be positive for the security, so too will the outlook be for that asset’s underlying options. Option Trading also provides their owners with numerous trading alternatives. Option Trading can be customized and combined with other options and even other investments to gain the benefits of any possible price dislocation within the market.
Option Trading enables the trader or investor to acquire a position that is pertinent for any sort of market outlook that he or she can have, and then be it bullish, bearish, choppy, or silent. It doesn’t matter at all.
Risks Involved In Option Trading
While there is no disputing that Option Trading offers many investment benefits, it also involves risk and is not for everyone. For the same reason that one’s returns can be large, so too can the losses.
Also, while the potential for financial success does exist in Option Trading, the means of realizing such opportunities are often difficult to create and to identify. With dozens of variables, several pricing models, and hundreds of different strategies to choose from, it is no wonder that Option Trading and its pricing have been a mystery to the majority of the trading public.
Quite often, in Option Trading a wonderful deal of information must be processed before a knowledgeable trading decision can be reached. Computers and sophisticated trading models are often relied upon to select trading candidates.
However, as humans, we like things to be as simple as possible in Option Trading. This often creates a conflict when deciding what, when, and how to trade a particular investment. It is much more easier to buy or sell an asset outright than to challenge with the many extraneous factors of these derivative markets.
If an investor thinks an asset’s value will appreciate, he or she can simply buy the security; but if an investor thinks an asset’s value will depreciate, he or she can simply sell the security. In such scenarios, the only thing an investor must worry about is the value of the investment relative to the value of the prevailing market. If only Option Trading were that easy!
Generally, Option Trading is more awkward and complicated than stock trading because here the traders must consider many variables aside from the direction they believe the market will move.
The effects of the passage of time, variables and delta, and the underlying market volatility on the splendid price of the Option Trading are just some of the many items that traders need to gauge in order to make informed decisions. If one is not prudent in one’s investment decisions, one could potentially lose an enormous number of money trading options.
Those who actually ignore cautious and sound money management techniques often find out the hard way that these factors can promptly and easily grind down the value of their Option Trading portfolios.
Due to the risks and benefits, Option Trading offers tremendous profit potential above and beyond trading in any other device, including the underlying security itself. This is the moment at which theoreticians enter the picture. Once the benefits have been defined, it is then just a matter of determining how to matchlessly attain them.
Up till now, the vast majority of Option Trading techniques have been elaborate mathematical models designed to help identify when option writing or selling opportunities exist.
On the other hand, we hope to break used ground by introducing simple market-timing techniques to Option Trading that will enable the traders to buy options with greater confidence and with greater success in Option Trading.

Online Tutorial About Indian Stock Market â Indiaâs Nse & Bse Share Markets

admin — Mon, 18 Jan 2010 11:23:28 +0000

MARKET INDICESNSE established an index services firm called IISL â India Index Services and products Ltd. â and opened numerous stock indices, including:

The other NSE Indices are:

MARKET CAPITALISATIONCurrently, NSE has four important capital market segments:

MAJOR COMPANIES OF NSEThe major companies listed with the NSE are:

The top investors of NSE are:

LOCATION OF NSENational Stock Exchange of India Ltd.Exchange PlazaPlot No. C/1, G BlockBandra-Kurla ComplexBandra (E)Mumbai 400051

BOMBAY STOCK EXCHANGE (BSE)

GENESIS OF BSE

MARKET INDICES

Apart from maintaining the BSE SENSEX, the Bombay Stock Exchange also maintains stock indices like:

BSE also gives the Beta value of the SENSEX Scrips, Beta being calculated by the formula: Beta = Co-Variance (SENSEX, Stock)/Variance (SENSEX).

While listing securities that may be from public limited companies, central government, state governments or other financial institutions, there are certain objectives followed by the BSE:

BSE SENSEX OVERVIEW

BSE PERFORMANCE

BSE COMPANIES

Given below is a catalogue of stocks listed in the BSE:

Options Trading 101

admin — Wed, 06 Jan 2010 23:38:32 +0000

The individual investor will typically include some stocks in their investment portfolio. And whether they are a long term trader or in it for much quicker returns, many investors understand and feel somewhat comfortable with the concepts and techniques of trading stocks.
Options tend to be much less understood – and therefore avoided. But Options can form an extremely valuable part of your trading strategy as they can provide tremendous returns!
So here I will try and give you some of the fundamental concepts behind trading options.
Options are a contract conferring the right to buy (a call option) or sell (a put option) some underlying instrument, such as a stock or bond, at a predetermined price (the strike price) on or before a preset date (the expiration date). Options officially expire on the Saturday after the third Friday of the contract’s expiration month but because the markets are typically closed on Saturdays, the Friday is commonly used as the expiration date.
A key concept to grasp is that, when you buy an option, you don’t actually own the underlying security. You simply own the right to buy (or sell) at a specific point in time. But, of course, the price of the underlying instrument and the time remaing before expiration both affect the value of the option itself.
So in trading options you have two main ways to make money on them:
- You can hold to maturity and then exercise the option (with the expectation that the underlying instrument is then worth more than what you are entitled to buy it at – your “strike price”)
- You can sell the option itself prior to expiration (in the expectation that the value of the option itself has risen above what you paid for it)
A great many investors do in fact hold until maturity and then exercise the option to trade the underlying asset. Assume the buyer purchased a call option at $3 on a stock with a strike price of $30. (Typically, options contracts are on 100 share lots.) To purchase the stock the total investment is:
($3 + $30) x 100 = $3300 (Ignoring commissions.)
So if, at expiration, the stock is worth more than $33 you’ve made a profit (You can sell your 100 shares for more than $3300 right away).
Speculating on the actual value of the option itself is the second alternative.
Let’s use the same example above.
You bought your options for $3 with a strike price of $30.
If the price of the underlying stock goes above $33 at any time prior to expiration, then naturally more people will want to try and get a hold of that option you own, because they see a high likelihood of making a profit off the underlying security. With the increased demand for that option, the value of the option itself will likely go up. So you can sell the option to that higher bidder for a profit.
For example, if the price of the underlying stock rose to, say $35 then the option itself may become worth, say $4 on the open market. So you sell your options for $4 and make a nice 33% return. Without ever having owned the underlying stock itself.
Those are the kinds of returns that make options so attractive.
Many brokers offer trading accounts to individual investors that allow options trading and frequently at very competitive commision rates.
It really isn’t very difficult to get started.
Options trading is risky, so manage your risk and your assets wisely and only use a small percentage of your overall portfolio for trading options. But do consider them as an additional component of your investment strategy, as they can yield tremendous returns when traded correctly.

Options as a Strategic Investment » Online Trading

Online Tutorial About Indian Stock Market â Indiaâs Nse & Bse Share Markets

So You Think You Know Option Trading?

Online Tutorial About Indian Stock Market â Indiaâs Nse & Bse Share Markets

Options Trading 101

Online Tutorial About Indian Stock Market â Indiaâs Nse & Bse Share Markets

Online Tutorial About Indian Stock Market â Indiaâs Nse & Bse Share Markets