Mahesh

CHAPTER 1
INDUSTRY PROFILE
A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY
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1.1.
India in Global Markets
The stature and significance of India is growing in the world capital markets. India is not only attracting greater interest from world markets, but is also assuming increasing importance in global finance.
India is a major recipient of foreign institutional flows amongst the emerging markets. Since the opening up of domestic stock markets to foreign investors, cumulative net FII investments reached Rs 517 Bn by 2008 end.
India is major destination of private equity flows into the emerging markets India is amongst the top fifteen stock exchanges in the world in respect of equity turnover
India emerged as a leading player in commodities futures market India is amongst the top five in the number of transactions India is among the top five in respect of volume traded in Stock Index Futures and Stock Futures
India is one of the few markets with extensive dematerialisation of shares Indias T+2 securities settlement cycle is at par with the global standards Indian stock markets have the largest number of listings, with trading taking place in about 2,500-3,000 stocks Indias most popular stock index (Sensex) is constructed on the basis of full float methodology, one of the firsts in the Asian region and a global standard
Indian market indices such as Sensex and CNX Nifty are listed in foreign exchanges for trading as ETFs.
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1.2.
Measures
Allow
Measures Taken by Indian Govt.

Objective Status
Foreign investment up to 49% will be allowed in these companies with a separate FDI cap of 26% and FII cap of 23% after approval from FIPB Mutual funds were allowed to invest in ADRs/GDRs and foreign securities within the overall limit of USD4 bn more Guidelines on issue of Indian Depository Receipts (IDRs) were issued
foreign
institutional Liberalization of stock investment in order to boost economic growth.
investors to invest in equity market to attract foreign and debt markets
Allowing Indian companies to issues ADRS and GDRS
Facilitate
market
integration and give freedom to the
Allow Indian nationals and companies to invest abroad
companies. Access to
funds for investment Divestment ownership of government Facilitate growth through Providing minimum public shareholding of privatization capture 25% in all listed companies all BSE and NSE jointly launched a common portal at www.corpfiling.co.in to
BSE and NSE to set up and To maintain corporate
bond information relating to trading. Investor protection
reporting platforms
disseminate filings made by companies listed in both the exchanges. KYC PAN made compulsory for all categories of investors for opening a DEMAT account with effect from Apr 1, 2006
Making PAN compulsory
Strengthening
(Know Your Client)
Transactions
necessarily Investor protection and It was made mandatory.
settled through the clearing greater control. corporations/clearing house Permit Gold Exchange Traded Generate Funds options for SEBI allowed the launch of Gold Exchange Traded Funds (GEFTs)
companies and investors
Table 1: Some important measures taken by govt.
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1.3.
Market Size and Characteristics
In tune with the global stock markets that began to recover from the second half of 2003; Indian stock markets too witnessed rapid growth. Indias two leading indices, the most popular BSE Sensex, and the one most used by the markets the National Stock Exchanges S&P CNX Nifty rose to record levels. Both primary and secondary market activity experienced sharp surge. Much progress was made in further strengthening and streamlining risk management, market regulation and supervision. A few aspects of the major developments in the Indias stock markets are described below. 1.3.1. Market Structure Indian securities market is fairly large as compared to several other emerging markets. Institutional Structure of the Indian Stock market. Market Intermediaries Stock Exchanges(Cash Market) Stock Exchanges(Derivatives Market) Brokers(Cash Segment) Corporate Brokers (Cash Segment) Sub-brokers (Cash Segment) Brokers(Derivatives) Foreign Institutional Investors Custodians Depositories Depository Participants Merchant Bankers Bankers to an Issue Underwriters Debenture Trustees 2012 23 2 10830 4590 74061 1442 1319 15 2 654 155 50 35 28
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Credit Rating agencies Venture Capital Funds Foreign Venture Capital Investors
5 106 97
Registrars to an Issue &Share transfer 76 Agents Portfolio Managers Mutual Funds Collective Investment Schemes 205 40 0
Table 2: Market Structure
Exchange-wise Brokers and Sub-Brokers in Indian Stock Exchanges Stock Exchange Brokers Sub Brokers %Corporate Brokers Ahmedabad Bangalore Bombay Bhubaneshwar Calcutta Cochin Coimbatore Delhi Gauhati Hyderabad Inter Connected Jaipur Ludhiana Madhya Pradesh Madras 317 256 840 219 962 434 135 375 110 304 788 507 293 174 182 119 156 10691 17 88 42 22 343 4 199 3 34 38 5 115 48 49 79 9 21 18 36 57 4 40 36 4 29 20 39
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Magadh Mangalore National SE OTCEI Pune Saurashtra Kutch UPSE Vadaodara
198 66 1014 769 192 426 463 311
3 1 11359 19 161
11 14 91 76 30 20
19 41
20 21
Table 3: Numbers of brokers and sub brokers.
Number of Accounts Added Equity Broking Companies Indiabulls Securities Limited Reliance Money Limited Bonanza Portfolio Limited Angel Broking Limited Motilal Oswal Securities Limited Accounts 238546 203538 38639 105076 103000
Marwadi Shares & Finance Private 65635 Limited India Infoline Limited Anand Rathi Securities Limited Jhaveri Securities Private Limited Karvy Stock Broking Limited 52773 52525 50000 48430
Asit C Mehta Investment Intermediates 39390 Limited Networth Stock Broking Limited Emkay Share & Stock Brokers Limited 38639 28276
Unico Financial Intermediaries Private 27000 A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY
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Limited Anagram Securities Limited India Capital Markets Private Limited 26460 23500
Table 5 : Numbers of client added
Equity Trading
Name of the Firm Brics Securities Ashika Stock Broking Motilal Oswal Arihant Capital Markets Dalal & Broacha A F N Langrana Shares K R Choksey Zen Securities Indiabulls
Revenue (%) 85% 85% 80% 79% 70% 70% 70% 65% 60% Table 6: Revenue generated by Equity Trading
Derivatives Trading
Name of the Firm India Advantage Securities Crimson Financial Dolat Capital Kantilal Chhaganlal Kunvarji Finstock R Wadiwala Revenue (%) 87% 80% 60% 59% 59% 43% Table 7: Revenue generated by Derivatives Trading
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Major players
Comparative Financials Rs. Crore Company Name Total income Apollo Sindhoori Capital Invsts. Ltd. Arihant Capital Markets Ltd. Bajaj Capital Insurance Broking Ltd. Brics Securities Ltd. Edelweiss Securities Ltd. Emkay Global Financial Services Ltd. Geojit B N P Paribas Financial Services Ltd. India Infoline Ltd. Indiabulls Securities Ltd. L K P Securities Ltd. Motilal Oswal Financial Services Limited. Networth Stock Broking Ltd. Reliance Capital Ltd. Religare Commodities Ltd. Total 122.03 61.24 26.05 68.01 384.97 131.79 208.52 672.45 628.31 59.06 34.79 54.22 952.76 32.31 3436.51
Table 8: Comparitice Financial
Rs. Crore PAT
Rs. Crore Net worth
21.59 14.18 2.87 48.89 186.44 23.5 48.23 128.69 248.66 3.46 17.18 3.05 1039.23 0.88 1786.85
45.1 39.07 6.99 111.78 258.24 132.26 233.61 989.85 364.02 15.66 399.92 53.89 5926.97 4.93 8582.29
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Diagram 1: Relative performance with the sensex with the brokerage houses.
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1.4.
PRODUCT GRID FOR BROKERAGE INDUSTRY
Product grid comprises of all the products offered by brokerage or securities industry. This industry is one of major emerging industry in the country as it helps in dealing with various financial aspects which help in building a good financial portfolio for an individual or corporate. Product grid, in simpler terms, can be explained as the whole basket of products offered by brokerage industry to its customers. This can further be explained by taking various companies operating in this sector and thereby comparing the products offered by these companies.
Motilal Oswal Reliance Karvy Money India Bulls Kotak Securit ies India Infolin e GeCapital Birla Global Finance Share Khan Sundar am Financ e
Equities
Derivatives
Y Y Y
Y Y N
Y Y N
Y Y N
Y Y N
Y Y N
Y Y N
Y Y Y
Y Y N
Y Y N
Margin funding Depository services Portfolio mgt.

Commodity
Y Y Y
Y N N
Y N N
Y N Y
N N Y
Y Y Y
Y Y Y
N N N
Y N Y
Y Y N
Wealthmgt
Research
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Mf Structured products
Y N
Y Y
Y N
Y N
Y Y
Y N
N Y
Y N
Y N
Y N
Third party N products Insurance Real estate Tax planning Off-shore investment e-broking Mortgages IPO Loans BPO KPO Bonds Promoter financing Buy-back N Y N Y N N N N N N N N N
Y Y Y
Y Y N
N N N
N N N
Y N N
N Y Y
N Y N
N N N
Y Y N
Y N Y N N N N N
N Y N Y Y Y Y Y
N N Y N N N N N
Y Y Y Y N N N N
N Y Y Y N N N N
N N N Y N N Y N
N N Y Y N N N Y
N N Y N N N N N
N N Y N Y N N N
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financing ESOP financing Retail financing Corporate financing Asset financing On-line Debt market Investment banking Mergers N N Y N N N N N N N N N Y N N N N N N N Y Y Y Y N Y Y Y Y Y Y N Y Y N N Y Y N N Y N N N N N Y N N N N N Y N N N Y Y N Y N N Y Y N N Y N N Y N N N N N N N Y N N
Table 9: Comparative Analysis
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1.5.

Global Securities Market

Equalization Institutional investment International listings Emerging markets as an investment destination Alternative markets Growth of Derivatives Private Equity Hedge Funds
1.6.
Recent Regulations in Stock Market
Systematic and streamlined regulation is the key strength and sustainability of the securities markets. Though formal regulation of the securities markets is about 70 years old, some of the recent developments in the financial markets are reshaping the scope and focus of the regulation. These include
There is growing harmonisation of regulation across different markets. Organisations such as International Organisation for Securities Commissions (IOSCO) are playing a very important role in adoption of uniform principles and guidelines across the markets.
The size and scope of the securities markets is rapidly changing from being one or two product markets to multi product markets with diverse features and different investor base.
Markets have become more democratized with more people and institutions participating in the market related activities.
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Rapid increase in the size of the institutional participation in the financial markets. For instance equity markets, which in the past were retail investor driven, are now increasingly become institutional induced.
Securities markets are transforming from being membership driven to public corporation following demutualization and corporatisation of stock exchanges in mature and emerging markets.
Two most important pieces of regulation that came into being in the recent period are in the form of market structure reforms in the US, known more popularly as regulation NMS, which underlines the promotion of competition across the markets under three major principles; best price, open access and transparency. Under the new trade-through role, in whichever market a customer placed his order, it should be able to access the best price that is immediately and automatically available anywhere in the national market system.
The trade-through rule will not allow markets to ignore better priced automated quotes displayed by the competitors. Similarly, open access to displayed prices will be a major feature governing the competition of the markets. The regulation also stipulates that all significant markets must display their quotations and trade reports should be available to all interested parties on fair terms and non discriminatory manner.
Another equally important development is the Markets in Financial Industry Directive (MiFiD) that will come into force from 1 Nov, 2007 and stipulates wide ranging norms for financial institutions in the European Union. Major features of the MiFiD include wider scope of coverage of the financial institutions and the related business activities, greater degree of harmonization across the European markets and facilitate cross border business and stipulated capital requirements.
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1.7.
PORTERS FIVE FORCES
Diagram 2: Porters Five Forces
1. The threat of substitute products The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand). 2. The threat of the entry of new competitors Profitable markets that yield high returns will draw firms. This results in many new entrants, which will effectively decrease profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level. A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY
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3. The intensity of competitive rivalry For most industries, this is the major determinant of the competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc. 4. The bargaining power of customers Also described as the market of outputs. The ability of customers to put the firm under pressure and it also affects the customer's sensitivity to price changes. 5. The bargaining power of suppliers Also described as market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources. The five forces model relevant to the Indian brokerage industry The Bargaining Power Of Customers Lack of Expertise Curtails Bargaining Power Retail investors often lack the knowledge and expertise in the financial sector that calls them to approach the broking houses. Low Product Differentiation Proves Beneficial The retail broking services provided by the various companies is homogeneous with very low product differentiation. This allows customers to enjoy a greater bargaining power.
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The Bargaining Power Of Suppliers Increased Dependence on IPOs There is a growing dependence of corporates on broking houses with the rising number of IPOs coming to the market. The Intensity Of Competitive Rivalry Move towards consolidation Lot of brokerage companies are moving towards consolidation with the smaller ones becoming either franchisees for the larger brokers or closing operations. Increased Focus of Banks in Retail Broking Various foreign banks like ABN Amro and others are planning to enter the Indian retail brokerage industry. Online Trading Competes with Traditional Brokerage There is an increasing demand for online trading due to consumers growing preference for internet as compared to approaching the brokers. Threat of New Entrants Entry of Foreign Players New forms of trading including T+2 settlement system, dematerialization etc are strengthening the retail brokerage market and attracting foreign companies to enter the Indian industry.
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The Threat Of Substitute Products Alternative Investment Options Various alternative forms of investment including fixed deposits with banks and post offices etc act as substitutes to retail broking products and services. Now even various banks provide similar type of services. They also give the same service of portfolio management and wealth management.
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1.8.
SWOT ANALYSIS ON BROKERAGE INDUSTRY

STRENGTHS WEAKNESSES Lack of visible goodwill among minor players Lack of trust on companies by customers Psyche of people in India is converging
Multiples engines of growth- an integrated platform financial services
Well established and continuously expanding geographical footprints Unique, stable and scalable business model. India country accounts. OPPORTUNITIES is world with second largest
D-Materialized
THREATS
High degree competition Fluctuations in government policies Political framework Developing Indian economy
Structure of the industry, market size, and growth rates-huge potential in Indian capital market
Liberalization of markets by govt. Proactive and progressive nature of Indian brokerage industry(India ranks amongst top five globally in this segment)
Table 10: SWOT ANALYSIS
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CHAPTER 2
COMPANY PROFILE
NARNOLIA SECURITIES LIMITED, RANCHI
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2. NARNOLIA SECURITIES LIMITED
2.1. The Beginning

The history of the company dates back to 1993,. The brilliant academic track record and a deep understanding of capital market of its founder CMD Mr Krishna N Narnolia helped him to lay the solid foundation of Narnolia with well defined core values and purpose of the organization.
1997 1997, May 1 The firm was corporatized. NARNOLIA SECURITIES PVT. LTD was founded, Mr. Shailendra Kumar (B.E., M.Tech, IIT Delhi) as one of the co-founding director also brought with his experience of industry of financial markets.
1999 First branch opened in Dhanbad.
2001 It was decided to make the organization big enough so that world class services can be created and managed efficiently and at the same time to keep it small enough to make the delivery of services personalized.
2002 Entered into strategic tie up with India's premier broking house MOTILAL OSWAL as their exclusive regional partner for the states of Bihar, Jharkhand and parts of west Bengal & Orissa
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2004
Tied up with BIRLA SUNLIFE as the exclusive distributor of its life insurance products.
Tied up with ENAM as their super franchisee for primary market distribution. Won the Best Franchisee Network of the Country Award at MOST.
2005 Tied up with the world famous Mutual Fund Advisor 'VALUE RESEARCH' led by Mr. Dhirendra Kumar.
2006

Published a monthly magazine NARNOLIA MUTUAL. Won the Best Franchisee Network of the Country Award at MOSt. Launched NARNOLIA PREMIER CLUB ( NPC) for its premium clients.
2007
o
Recognized by Franklin Templeton as the Best Distribution House in the East in terms of No. of application.
Recognized by Reliance Life as the best CDA in the country.
2008
Nominated by CNBC as the best performing Regional Level Financial Advisor of East for the year 2008.
The group took a major leap forward by corporatizing its research initiative in the name of EASTWIND on the patterns of internationally best practices. It launched series of investment (wealth management) and Corporate Benchmarks (E/W INDEX). While the series of Wealth Management Index have been uniquely
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designed to satisfy the needs of both institutional and private investors as a measurement tool for investment portfolio, the corporate benchmark is meant for our visionary corporate clients to make a strategic comparison of companies' business performance with the peer companies and a benchmarked "best practices" leader. Once strategically restructured, the Investment Banking arm of the group helps the company in fund raising and all other capital budgeting exercise.
NSL GROWTH
YEAR 1993 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
LOCATION 1 3 7 11 16 27 38 86 126 156 178 200 225
NO. OF CLIENTS 600 1500 3000 5300 9200 12000 15000 25000 35000 42000 50000 60000 70000
NO. OF EMPLOYEES 6 16 28 38 60 94 133 221 450 525 600 700 900
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2.2. VISION AND MISSION VISION

We will be the most trusted, most knowledgeable, most understanding and most concerned provider of value added and customer centric financial services in our strategically chosen class and also mass market.
MISSION
We commit ourselves both in thought and action to raise ourselves in the eyes of our true boss i.e., the investors from being a mere transaction broker to a true family financial doctor and a secretary to help them to protect and improve their financial health. We further resolve not to sell Daru (gambling) in the bottle of Dawa (investment) and will dare to tell them the difference between the two even if it results into low revenue in the short term. We shall invest most of our time, energy and resources to reduce gaps at each touch points with our existing investors and shall see our growth in their growth. Let us believe that quantity follows quality.
QUALITY POLICY
Narnolia is committed to implementing appropriate quality management system to ensure satisfaction of the client (core purpose ) and other interested parties by ensuring the planning and delivery of consistently high level of service as per the predetermined high standards of systems, processess, policies, procedures and behaviours required for each of our financial products throughout the extensive area of operation. We all share the responsibility to ensure continual improvement and establish long term relationship with each Stakeholder.
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CORE PURPOSE
Like a Doctor whose primary duty is to save and improve the life of his patient, the primary duty of our company, as an investment and financial advisor, should be to help our customers protect and create wealth. The profit of the organization should be seen as the secondary objective and as the resultant of the primary duty.
BUSINESS MODEL
The business model is centered around the vision, mission and core purpose of the organization. It is based on the success stories of the world and unique situations of the country. It was realized that the interest of the customers (core ideology) could best be served if all the world class products and services could be made available to our customers in a personalized way tuned to one's unique personal circumstances. Accordingly decision was taken to enter into some strategic and exclusive tie ups with leaders of each product. The role of our research team comprising several investment experts was to add value to each such products and also to tailor-make it as per specific needs
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2.3.
Name
MANAGEMENT TEAM
Designation
Chairman-cum-Managing Director Director - Corporate Strategy Director - Execution & HR V.P. & Head - NPC (Delhi) Head - Back Office Operations VP & Head - Business Deveploment(Distribution) Associate V.P Vice President A.V.P Internal Accounts Associate V.P- Corporate Finance Head Marketing Head HR Head RMS Head - Customer Support A.V.P, Regional Head - Dhanbad A.V.P, Regional Head - Patna Associate Regional Head (NPC)- Kolkata
Krishna Nand Narnolia(Gold Medalist, M.B.A) Shailendra Kumar(B.E,M.Tech.,IIT-Delhi) Dilip Losalka(B.E Hons, BITS,Pilani) C.A. Jasleen Kaur Bhasin(DISA) C.A. Vikash Ranjan Sahay Abhishek Singhania(MBA)
Sujeet Kumar Singh(DPCM,MBA) OM Prakash Agarwalla(BTECH - Industrial Engg) Dharmendra Kumar Sinha(MBA) C.A Anand Kumar Agarwal C.A Rajesh Kumar Singh Anumeha (MBA) Rajeev Barnwal Sushma Srivastava (MBA) Dinesh Agarwal Rajesh Agarwal Randhir Barnwal (MBA)
Ankush Choudhary
Associate Regional Head (Retail & ACD)Kolkata Associate Regional Head - Jamshedpur Cluster Head - Asansol & Durgapur Page 26
Anup Kumar Singh Deepak Kumar
Prachi Agarawal (MBA) Vikash Kumar (MBA) Digamber Kumar (MBA) Sanjeev Suman Sahay (MBA) Amit Saraf Manit Katriyar Sandeep Tibrewal Deepak Kumar Sharma Ajeet Kumar Singh Rakesh Agarwal Biplab Sasmal Baidhyanath Mishra
Branch Head - Deoghar Branch Head - Ranchi Branch Head - Sahebganj Branch Head - Daltonganj Branch Head - Malda Branch Head - Hazaribagh Branch Head - Purulia Branch Head - Lakhisarai Branch Head - Katihar Branch Head - Bhagalpur Branch Head - Haldia Branch Head - Raniganj
Table No: 11 Management Profile
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2.4.
PRODUCTS AND SERVICES
To earn is difficult but to save out of it is more difficult, but even more difficult is to invest such savings in the right avenue of investment. There is no one best way of making money. Sound investing is, infact, a disciplined money management process and should be grounded in an investment plan that is based on one's personal circumstances. It requires an organized knowledge, latest information & conceptual imagination to arrive at such investment plan of an investor .This can be done on one's own or with the help of a financial adviser. We, at NARNOLIA, believe in providing all avenues of investment under one roof, but what differentiates us from others is the quality of each product in terms of suitability, speed, convenience, transparency and above all, the empowering advice the bedrock of which is the WORLD CLASS research and analysis of each product by our team of investment experts in close association with Motilal Oswal Securities. All these facilities of trade execution & advisory services can be availed through any of our over 200 outlets in Jharkhand, Bihar & West Bengal having world class infrastructure. And if you are little computer savvy then even the trade execution can be done by you on your own either at a place of your convenience or at any of our offices using our infrastructure through our net trading platform MY BROKER. 2.4.1. INVESTMENT & TRADING IN SHARES (STOCK MARKET) Globally it has been experienced that over time, a portfolio of well-chosen shares will always outperform bond or fixed deposit. Motilal Oswal Securities Ltd (MOSt) is the member of both NSE & BSE . It is one of the leading stock broker of the country and has been rated by the famous Asia Money Poll '05 as the NO 1 in various categories including the most prestigious 'BEST LOCAL BROKERAGE HOUSE OF THE COUNTRY'. End to end equity solution is provided through the online trading terminals by the team of investment experts & relationship managers. NARNOLIA is the exclusive regional partner of MOST for the states of Jharkhand, Bihar and northern part of West A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY
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Bengal and is the winner of BEST SUB-BROKER OF THE COUNTRY AWARD twice in 2004 and 2006. Cash Trading: It is a delivery based trading system wherein transactions can be settled intraday or can be settled by taking delivery of shares or monies. Margin Trading : It is similar to cash trading except an additional facility wherein the investor interested in taking leveraged position can do so by paying only certain % of the total payment & the balanced amount is financed by an independent investment company. A separate form is required to be filled up for availing this facility. Click here for list of shares. Spot Payment: Normally under T+ 2 settlement cycle it takes around 3-5 days before the payment gets credited in clients account.In cases where a client having shares in our depository account needs payment early or same day he/she can avail this facility with prior intimation.
BNST : Buy Now Sell Tomorrow (BNST) facilitates a client to sell specified shares (as attached) on T+1 basis even before the receipt of shares into his/her demat account. Premium Services: Clients who want to avail the services of our world class research team at MOSt and NARNOLIA can do so through one of our Relationship Managers who are closely monitored & guided by our research analysts. A wide array of products are available A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY
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which are offered to our esteemed investors depending on his/her specific investment objective, time horizon & risk appetite. These products have been classified as (a) INDEX + (b) INTEREST + (c) INTEREST + + and (d) ADVISORY +. Portfolio Management Service( PMS): It is an alternative to investing directly. All those who do not have time or discipline or inclination or expertise to understand the complex ways of investment ,still want to take benefits of it , can do so by putting their money with the fund managers. Our PMS helps you to earn the returns of Equities, with maximum ease and comfort. We have 3 different schemes Value ,Bull's Eye,Discover Value PMS, with different approaches to managing your investments. The team of fund managers is headed by Mr Raamdeo Agrawal. 2.4.2. INVESTMENT IN EQUITY DERIVATIVES Trading volume in derivative segment of the exchanges have surged significantly over last few months/years. However , the bias is more towards future than options. There are few misconceptions about this market. It is largely used by speculators to take leveraged positions in the market. It is considered as a mere replacement of the age old badla system of BSE. But the fact is that this derivative market has much larger role to play not only for the speculators but moreso for the investors, particularly the high net worth & institutional investors. With the use of certain financial management tools like; Standard Deviation, Theta, Delta,Beta, Gamma, Rho,Vega etc , one can create several strategies using multiple types of financial instruments of derivatives market. These strategies can be used by the investors for risk management, hedging, arbitrage and generation of regular incomes out of the idle investment. We ,at NARNOLIA, have a dedicated team of investment experts comprising several Chartered Accountants , MBAs etc who are trained at our Narnolia Knowledge Centre and are also closely supported by the experts at MOSt, Mumbai. An in house software has been developed by us using all the above advance tools to help the investors to maximize their ROE. In view of the increasing popularity of derivatives amongst speculators we have introduced a very low brokerage A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY
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scheme (lowest slab being .01%) for our net traders. Please click here for 1 PAISA SCHEME IN MY BROKER. 2.4.3. INVESTMENT THROUGH MUTUAL FUNDS It is an alternative to investing directly. All those who do not have time or discipline or inclination or expertise to understand the complex ways of investment ,still want to take benefits of it , can do so by putting their money with the money managers :mutual funds who are supposedly the experts in investment matters and are expected to perform better than individual common investor because of their economies of scale, professional approach, experience, investing acumen, access to money market instruments to park their short term/surplus funds etc. All these features have made them globally a powerful and most convenient wealth creation vehicle. As per one estimate 75% of the retail money over next 10 years is supposed to come through mutual funds. But, mutual funds are not magic investment tool and there are a few problems in this expected all powerful investment solution. Mutual fund cannot guarantee either a return or wealth protection, particularly if it is a equity oriented fund. Further, there are around 2300 MF Schemes in India and are likely to multiply even from hereon. As such choosing the right scheme of the right fund or the right mix of schemes of different mutual funds, suitable to one's investment objective, time horizon & risk appetite, is a daunting task. The return on investment of different investors will be different depending on the scheme or mix of schemes where they invested their money. We, at NARNOLIA, can assist our investors here as we are the corporate distributor of most of the MFs operational in India and moreso, because we have an exclusive tie up with the world famous and India's premier Mutual Fund advisor- VALUE RESEARCH, headed by Mr Dhirendra Kumar. We work together to arrive at the most efficient and productive investment solution based on specific needs of an individual. A monthly magazine NARNOLIA MUTUAL is jointly published providing some ready made alternatives of scheme mix (portfolio). This is customized further for our clients depending on his/her personal circumstances & needs.
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2.4.4. PRIMARY MARKET Initial Public Offer (IPO) by non listed companies or follow on offer by presently listed companies presents a good opportunities for making high returns on investment in a very short period of time. However, contrary to common belief investment through new issues does not always give high return or guarantee capital protection. We, at NARNOLIA, provide you the list of all forthcoming new issues & in-depth analysis of all such issues. A TEN COMMANDMENTS (click here) is available to all for general guidelines. Online bidding and a detailed news, views, follow up, recent listings etc are provided to our investors free of cost. We have a dedicated servicing team to help you to relieve you of all possible hassles of investing in new issues. It is because of this simplicity, convenience & expertise we are far ahead of others in our area of operation with a market share of more than 75% in Jharkhand and in some promising new issue. 2.4.5. DEPOSITORY SERVICES Our depository services with the trade name of "MODES"- Motilal Oswal Depository Related Services (Member NSDL & CDSL) is available to both our trading & non trading client. We , at NARNOLIA, manage around 40,000 depository accounts of our clients. All normal depository related services (a/c opening, dematerialization, remat, transmission, nomination, pledging etc) are provided by our efficient exclusive team of experts, but what differentiates us from others is some exclusive features of MODES:

It is amongst the cheapest of all the D.Ps A client can get automatic trading exposure limit in cash /derivatives segments based on the valuation of his/her holdings. But it has to be settled in cash/shares at the end of the settlement as per T+2 cycle.
In case the client want leverage in payment , he/she can open margin trading account wherein fund outstanding limit is given to such client based on such holdings in his depository account. It is very much similar to loan against shares
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with additional benefits of convenience, low cost because interest is charged on daily basis based on actual debits.
Clients having depository account with us can avail spot payment and BNST facility, whenever he /she needs to avail these facilities.
Clients having holding over 10 lac gets free research reports & recommendations based on MOSt research which has been rated as the No 1 by Asia money poll 2005.
There is a dedicated support team headed by smt Sushma Srivastava with dedicated toll free no(1800 345 4000) to provide you all depository related services and complaint redressal.
2.4.6. COMMODITY The origin of commodity markets and trading is lost in history. It is the oldest of all the futures market but the nature of deals was largely one off ,at least till 1865 when Chicago Board Of Trade began trading futures contracts in grains. In India there are around 21 commodity exchanges but are largely single commodity exchanges and are off line. Commodity market got a major boost in April 2003 when its regulator FMC allowed almost all commodities to be traded .This paved the way for the emergence of Multi Commodity Exchange Of India (MCX) in Nov 2003 and of National Commodity And Derivative Exchange (NCDEX) in Dec. 2003 who launched national level on line trading terminals in a transparent and organized manner. These exchanges have seen a surge in the trading volumes and it is expected that volumes in commodity will surpass the volumes in equity. It will provide a very meaningful option of investment along with other asset class and will have a deeper root with the participation of wider segments of market participants like investors, hedgers, arbitragers, traders, manufacturers, planters, importers, exporters etc. Motilal Oswal Commodities Broker (P) Ltd (click here) is the
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clearing and trading members of both the exchanges and has a big research team to support various participants in their own way. 2.4.7. INSURANCE As per several estimates it is said that Indians are grossly under insured and with the growing working age population & their income level this sector should see a rapid growth even from hereon. We, at NARNOLIA, realize the importance of insurance as one of the most important asset class while determining the asset allocation for any investor. Our sister concern, NARNOLIA INSURANCE AGENTS CO (P) LTD is the exclusive jeevan chakra partner of Birla Sunlife for Jharkhand and serves its clients from its various outlets in Bihar, Jharkhand & West Bengal, through their qualified advisors. Soon ,it will have non life products as well in its kitty. 2.4.8. CORPORATE FINANCIAL PLANNING Two companies with similar net profit, net worth (based on balance sheet valuation) and same product line can differ in terms of their wealth creation for the shareholders. We ,at NARNOLIA, in close association with the investment banking and private equity wing of MOSt provide various corporate advisory and support services to various listed and unlisted business houses including the SMEs. We provide end to end wealth creation support and solutions: helping the management in taking most efficient and effective financial & investment decisions, imparting management skills and also to provide growth capital up to $3 million to $7 million to selected few. A whole lot of exclusive team of experts including IITians, MBAs (IIM) are there to support such esteemed clients.
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2.4.9. NARNOLIA KNOWLEDGE CENTRE Falling interest rate has changed the rule of the money making game. While it has given a boost to the entrepreneurs and consumers, it has ,at the same time, made the life of passive investors very difficult ,as their age old no brainer ally - fixed deposit in bank/ post office- is yielding a return which is barely enough to beat even inflation. In this context of low interest regime and also when the growth of service sector has outpaced the industrial or agrarian growth, the need of an organized knowledge is increasingly been felt at various levels of economic activity. In view of this we, at NARNOLIA, decided to create an independent department to impart training to all our business partners, branch heads, relationship managers and also to our respected clients who are eager to know the art of wealth creation. It includes following few modules and are imparted to all in different combinations depending on the need and ability of each trainee:
BASIC COURSE: Indian Financial System:-structures, functions. Understanding various financial instruments of capital market viz equity, debt etc .Basic knowledge of wealth creation: investment options, asset mix, portfolio building, portfolio restructuring
ADVANCE COURSE: Part 1:-Behavior of equity market (short term vs long term, learnings & unlearnings, india story. Part 2:-Fundamental & technical analysis. Part 3:-Advance knowledge of wealth creation . The financial Horoscope : Need based wealth creation & financial planning strategies.
EMERGING TRENDS: -challenges & opportunities. SERVICING ,MARKETING & BACK OFFICE OPERATIONS. REFRESHER CLASSES & EXAM.
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2.5. COMPETITORS OF NARNOLIA SECURITIES

Narnolia Securities in collaboration with Motilal Oswal serves a vast range of all financial products like advisory services, Mutual funds, Bonds, Insurances etc, so all the companies who offer these services are the competitors of the Narnolia. There are many competitors for Narnolia on this basis and almost all of them offer the services which Narnolia offers. Few Major competitors are: 1. 2. 3. 4. SSKI Ltd. (Sharekhan) Bonanza securities Kotak Securities Religare Securities
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Comparative Analysis
S. NO BASIS KARVY STOCK BROKING Ltd. 1 REACH NO. OF BRANCHES OVER 200 OVER 200 IL&FS MOTILAL ANANDRATHI SECURITIES LTD INVESTSMART OSWAL SECURITIES LTD 1160 132
2.1
BROKERAGE INTRADAY
5 PAISE
5 PAISE
4 PAISE
5 PAISE
2.2
BROKERAGE DELIVERY
50 PAISE
50 PAISE
40 PAISE
50 PAISE
2.3 3.1
BROKERAGE FUTURE DEMAT A/C & TRADING A/C OPENING CHARGE
5 PAISE Rs. 455
5 PAISE Rs 950
4 PAISE Rs. 500
5 PAISE Rs 450
3.2
DEMAT A/C ANNUAL MAINTENANCE CHARGE
NIL
NIL
Rs. 450
NIL
EXPOSURE INTRADAY DELIVERY DAYS LIMIT
Depends Depends Depends
Depends Depends Depends Rs 25 LACS
2 Times Depends Depends Rs 5 LACS
Depends Depends Depends Rs 25 LACS
PMS MINIMUM INVESTMENT
Rs. 1 LACS
Table 12: Brokerage firms wise analysis
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Why should investors choose for Narnolia? Excellence is next to nothing and here at Narnolia everybody tries their best to offer excellent services to its clientele through its offerings maintaining the Narnolia culture which includes: 1. Controlled and low cost service culture: Narnolia is there to serve its client at the minimum possible cost. it controls cost by its various cost- cutting techniques and minimization of avoidable costs. 2. Large volume processing capability: being the largest financial service provider in the country, it has the unique distinction of operating its activities on a large scale which benefits all the parties cordially. 3. Adherence to strict time schedule: Narnolia knows that time is money and tries it best to finish the task within the stipulated time schedule. 4. Expertise in coordinating multi-location responses: Narnolia has got a wide network and hence one can find its branches at most of the places in India. Thus it enjoys its presence everywhere and coordinates among itself in solving the queries and in responding to any situation. 5.Expertise in managing independent entities such as banks, post-office etc.: the work culture of Narnolia and the ethics followed inside Narnolia makes its workforce compatible with everybody, so the Narnolia people establishes good coordination with independent entities too. 6. Pooling of group resources: Narnolia group consists of eight subsidiaries, so it can easily pool up its resources for accomplishment of its goals, whenever needed. The groups can help each other whenever there are peaks and lows, and even in the case when they have huge targets just as we saw few years back, Tata group pooling its resources to acquire Corus.
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2.6. ORGANISATION STRUCTURE

There are various departments and segments in NARNOLIA SECURITIES LIMITED. The Ranchi branch, where I took my internship is one the oldest branches all over Eastern India. So far, the performance of this branch has been good and it has been a contributing factor in increasing the customer base of NARNOLIA SECURITIES LIMITED.
STRUCTURE
Sub dealer
Main dealer
HEAD
MF desk
Sub back office person
Tele Sales
Wealth Manager
Wealth Manager
Tele Sales
CRM
CRM
CRM
CRM
CRM
CRM
R O
R O
R O
R O
R O
R O
R O
R O
R O
R O
R O
R O
Diagram 3.a. Consolidated Organisation Structure
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HIERARCHICAL STRUCTURE IN DIAGRAM
HEAD / MD ZONAL HEAD BRANCH HEAD
Diagram 3.b. Consolidated Organisational Structure
The above diagram shows the hierarchy of NARNOLIA SECURITIES LIMITED. It can be easily depicted from the diagram that the regional head is the supreme in the eastern region, under whom the various zonal heads operate and under these zonal heads, the branch heads operate. Between each level of the hierarchy, there exists a coordinator, who acts as the facilitator between the different heads.
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STRUCTURE ACCORDING TO THE PRODUCTS OFFERED BY NARNOLIA SECURITIES LIMITED
REGIONAL HEADS
PRODUCT HEADS HEA Realty Debt divisio n
Mutual funds
Insuran ce brokin g
commo dities
Stock brokin g
Deposi tory partici pant
Merch ant & inv.ban king
PMS
Diagram 3.c. Consolidated Organisation Structure
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2.7. FINANCIALS
Annual results in brief
Mar ' 09 Sales Operating profit Interest Gross profit EPS (Rs) 4.91 -0.89 0.08 -0.48 -1.50 Mar ' 08 8.02 1.47 0.12 1.93 2.10 Mar ' 07 5.13 0.73 0.03 1.06 1.01 Mar ' 06 4.40 0.98 1.13 1.18 Mar ' 05 3.11 0.82 0.01 0.97 1.15
Annual results in details

Mar ' 09 Other income Stock adjustment Raw material Power and fuel Employee expenses Excise Admin and selling expenses Research and development expenses Expenses capitalized Other expenses Provisions made Depreciation Taxation Net profit / loss 0.49 2.13 3.67 0.26 0.03 -0.76 Mar ' 08 0.59 1.72 4.84 0.23 0.63 1.07 Mar ' 07 0.36 4.40 0.23 0.31 0.52 Mar ' 06 0.16 3.42 0.17 0.36 0.60 Mar ' 05 0.16 2.29 0.12 0.26 0.59
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Mar ' 09 Extra ordinary item Prior year adjustments Equity capital Equity dividend rate Agg.of non-prom. shares (Lacs) Agg.of non promotoHolding (%) OPM (%) GPM (%) NPM (%) 5.09 14.53 28.53 -18.07 -8.81 -14.11
Mar ' 08 5.09 14.53 28.53 18.26 22.42 12.43
Mar ' 07 5.09 14.53 28.53 14.15 19.25 9.38
Mar ' 06 5.09 14.53 28.53 22.24 24.85 13.22
Mar ' 05 5.09 14.53 28.54 26.22 29.61 17.99
Balance sheet Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05
Sources of funds Owner's fund
Equity share capital
5.09
5.09
5.09
5.09
5.09
Share application money
Preference share capital
Reserves & surplus
2.52
3.31
2.27
1.73
1.12
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Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05
Loan funds Secured loans 2.49 3.83 2.70 0.44 -
Unsecured loans
0.13
Total
10.11
12.24
10.06
7.26
6.34
Uses of funds Fixed assets
Gross block
2.17
1.91
1.99
1.51
1.27
Less : revaluation reserve
Less : accumulated depreciation
0.61
0.53
0.71
0.47
0.35
Net block
1.57
1.38
1.28
1.03
0.92
Capital work-in-progress
Investments
7.56
3.49
3.49
3.49
3.49
Net current assets Current assets, loans & advances 7.89 15.76 11.17 9.24 5.68
Less : current liabilities & provisions
6.91
8.39
5.88
6.50
3.75
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Total net current assets
0.98
7.37
5.29
2.74
1.93
Miscellaneous expenses not written
Total
10.11
12.24
10.06
7.26
6.34
Notes: Book value of unquoted investments 3.29 3.47 3.47 3.47 3.47
Market value of quoted investments
Contingent liabilities
Number of equity sharesoutstanding (Lacs)
50.92
50.92
50.92
50.92
50.92
Profit loss account

Income
Operating income 4.91 8.02 5.14 4.45 3.11
Expenses
Material consumed -
Manufacturing expenses
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Mar ' 09
Mar ' 08
Mar ' 07
Mar ' 06
Mar ' 05
Personnel expenses
2.37
1.94
1.33
0.80
0.50
Selling expenses
0.82
0.87
0.34
Adminstrative expenses
3.46
4.64
2.17
1.72
1.43
Expenses capitalised
Cost of sales
5.83
6.58
4.32
3.39
2.28
Operating profit
-0.91
1.44
0.82
1.06
0.84
Other recurring income
0.49
0.58
0.31
0.16
0.17
Adjusted PBDIT
-0.43
2.03
1.13
1.22
1.00
Financial expenses
0.08
0.12
0.09
0.08
0.04
Depreciation
0.26
0.23
0.23
0.17
0.12
Other write offs
Adjusted PBT
-0.77
1.67
0.80
0.97
0.84
Tax charges
0.02
0.62
0.31
0.33
0.28
Adjusted PAT
-0.79
1.05
0.49
0.64
0.56
Non recurring items
0.05
-0.03
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Mar ' 09
Mar ' 08
Mar ' 07
Mar ' 06
Mar ' 05
Other non cash adjustments
-0.01
-0.01
Reported net profit
-0.79
1.04
0.54
0.61
0.56
Earnigs before appropriation
2.35
3.14
2.10
1.56
0.95
Equity dividend
Preference dividend
Dividend tax
Retained earnings
2.35
3.14
2.10
1.56
0.95
Table 13 : Consolidated Financials
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CHAPTER 3 LEARNINGS INVESTMENTS
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3.1. MEANING
Investment is the commitment of money or capital to purchase financial instruments or other assets in order to gain profitable returns in form of interest, income, or appreciation of the value of the instrument. It is related to saving or deferring consumption. Investment is involved in many areas of the economy, such as business management and finance no matter for households, firms, or governments. An investment involves the choice by an individual or an organization such as a pension fund, after some analysis or thought, to place or lend money in a vehicle, instrument or asset, such as property, commodity, stock, bond, financial
derivatives (e.g. futures or options), or the foreign asset denominated in foreign currency, that has certain level of risk and provides the possibility of generating returns over a period of time. There are various different options of investments available from which the investors choose to invest in. The investments can be broadly classified into:
EQUITY DEBT INVESTMENTS
REAL ESTATE
FUTUURES AND OPTIONS
BULLION / COMMODITY
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3.2. INVESTMENT IN EQUITY

Equity Shares are also known as ordinary shares, they represent the owners capital in a company. The holders of these shares are the real owners if the company. They have control over the working of the company as they voting rights. Dividend is paid to them after paying to the preference share holders. Their dividend is not fixed as it varies with profitability, in the years of losses may not receive dividend at all. They take risk of both regarding dividend and return on capital. They cannot be redeemed during the lifetime of the company.
3.3. DEBT INVESTMENT

Debt Investment refers to investment in bonds and securities. Types of debt investment a. Central Govt Securities - These are the most safest debt investment that one can make. They dont have any default in payments. Even in case of bad situations, the government can print currency and payback the investment to the investors. b. State Government Securities - These are provided by respective state government and are less liquid compared to central Government securities. It has a higher yield than central govt securities and it may default on payment but in history it has never happened. c. Public sector bonds - These are issued by public sector undertakings who borrow funds from the markets in terms of bonds. d. Domestic Financial Institutaion bonds - These are provided by financial institutions like IDBI, ICICI and these are unsecured bonds. e. Corporate Debentures - Private sector companies raise fund from investors through corporate debentures. f. Commercial Paper - Private companies meet short term(1-6 months) fund requirements through commercial paper. A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY
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3.4.STRUCTURE OF INDIAN MARKETS
INDIAN STOCK MARKET
DERIVATIVES
CASH MARKET
FUTURES
OPTIONS
Diagram 4: STRUCTURE OF INDIAN MARKETS
CASH MARKET: A cash market may take the following forms: self-regulated centralized markets, such as commodity exchanges; decentralized over-the-counter markets where private transactions may occur; or localized community organizations, such as grain elevators. At these locations, you can purchase the actual physical commodity rather than just the futures contract. DERIVATIVES: A derivative is an agreement or con that is not based on a real, or true, exchange, i.e.: There is nothing tangible like money, or a product, that is being exchanged. For example, a person goes to the grocery store, exchanges a currency (money) for a commodity (say, an apple). The exchange is complete, both parties have something tangible. If the purchaser had called the store and asked for the apple to be held for one hour while the purchaser drives to the store, and the seller agrees, then a derivative has been created. The agreement (derivative) is derived from a proposed exchange. A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY
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FUTURES: A 'Future' is a contract to buy or sell the underlying asset for a specific price at a pre-determined time. If you buy a futures contract, it means that you promise to pay the price of the asset at a specified time. If you sell a future, you effectively make a promise to transfer the asset to the buyer of the future at a specified price at a particular time. Every futures contract has the following features:

Buyer Seller Price Expiry
Some of the most popular futures contracts available are equity stocks, indices, commodities etc. The difference between the price of the underlying asset in the spot market and the futures market is called 'Basis'. (As 'spot market' is a market for immediate delivery) The basis is usually negative, which means that the price of the asset in the futures market is more than the price in the spot market. This is because of the interest cost, storage cost, insurance premium etc., That is, if you buy the asset in the spot market, you will be incurring all these expenses, which are not needed if you buy a futures contract. This condition of basis being negative is called as 'Contango'. OPTIONS: Options contracts are instruments that give the holder of the instrument the right to buy or sell the underlying asset at a predetermined price. An option can be a 'call' option or a 'put' option. A call option gives the buyer, the right to buy the asset at a given price. This 'given price' is called 'strike price'. It should be noted that while the holder of the call option has a right to demand sale of asset from the seller, the seller has only the obligation and not the right. For eg: if the buyer wants to buy the asset, the seller has to sell it. He does not have a right.
Similarly a put option gives the buyer a right to sell the asset at the 'strike price' to the buyer. Here the buyer has the right to sell and the seller has the obligation to buy.
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So in any options contract, the right to exercise the option is vested with the buyer of the contract. The seller of the contract has only the obligation and no right. As the seller of the contract bears the obligation, he is paid a price called as 'premium'. Therefore the price that is paid for buying an option contract is called as premium.
The buyer of a call option will not exercise his option (to buy) if, on expiry, the price of the asset in the spot market is less than the strike price of the call. For eg: A bought a call at a strike price of Rs 500. On expiry the price of the asset is Rs 450. A will not exercise his call. Because he can buy the same asset from the market at Rs 450, rather than paying Rs 500 to the seller of the option.
The buyer of a put option will not exercise his option (to sell) if, on expiry, the price of the asset in the spot market is more than the strike price of the call. For eg: B bought a put at a strike price of Rs 600. On expiry the price of the asset is Rs 619. A will not exercise his put option. Because he can sell the same asset in the market at Rs 619, rather than giving it to the seller of the put option for Rs 600. Futures and Options are of 1 month, 2months or 3 months, these contracts expire on last Thursday of every month.
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CHAPTER 4
MAKING MONEY THROUGH OPTIONS
4.1. IMPORTANT TERMS FOR OPTIONS

Spot Price: Is the current market price at which indices or stock is trading.
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Strike Price: It is the levels at which market is to be in near future. Premium / Discount: It is the price which has to be paid for getting a position of options. CA: American Call, It is not for indices and for individual stocks. PA: American Put, It is not for indices and for individual stocks. CE: European Call, It is for indices and not for individual stocks. PE: European Put, It is for indices and not for individual stocks.
4.2. MAKING MONEY THROUGH OPTIONS

Long Call Strategy Short Call Strategy Synthetic Call Strategy Long Put Strategy Short Put Strategy
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4.2.1. LONG CALL STRATEGY

For aggressive investors who are very bullish about the prospects for a stock / index, buying calls can be an excellent way to capture the upside potential with limited downside risk. Buying a call is the most basic of all options strategies. It constitutes the first options trade for someone already familiar with buying / selling stocks and would now want to trade options. Buying a call is an easy strategy to understand. When you buy it means you are bullish. Buying a Call means you are very bullish and expect the underlying stock / index to rise in future. When to use: When investors are very bullish about the stock / index. Risk: Limited Risk Returns: Unlimited Break Even: Strike Price + Premium
Analysis: This strategy limits the downside risk to the extent of premium paid. But the potential return is unlimited in case of rise in Nifty. A long call option is the simplest way to benefit if you believe that the market will make an upward move and is the most common choice among first time investors in Options. As the stock price / index rises the long Call moves into profit more and more quickly.
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4.2.2. SHORT CALL STRATEGY

When you buy a Call you are hoping that the underlying stock / index would rise. When you expect the underlying stock / index to fall you do the opposite. When an investor is very bearish about a stock / index and expects the prices to fall, he can sell Call options. This position offers limited profit potential and the possibility of large losses on big advances in underlying prices. Although easy to execute it is a risky strategy since the seller of the Call is exposed to unlimited risk. A Call option means an Option to buy. Buying a Call option means an investor expects the underlying price of a stock / index to rise in future. Selling a Call option is just the opposite of buying a Call option. Here the seller of the option feels the underlying price of a stock / index is set to fall in the future. When to use: When investors are very bearish about the stock / index. Risk: Unlimited Returns: Limited Break Even: Strike Price + Premium
Analysis: This strategy is used when an investor is very aggressive and has a strong expectation of a price fall (and certainly not a price rise). This is a risky strategy since as the stock price / index rises, the short call loses money more and more quickly and losses can be significant if the stock price / index falls below the strike price. Since the investor does not own the underlying stock that he is shorting this strategy is also called Short Naked Call.
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4.3.3. SYNTHETIC LONG CALL: BUY STOCK, BUY PUT

In this strategy, we purchase a stock since we feel bullish about it. But what if the price of the stock went down. You wish you had some insurance against the price fall. So buy a Put on the stock. This gives you the right to sell the stock at a certain price which is the strike price. The strike price can be the price at which you bought the stock (ATM strike price) or slightly below (OTM strike price). In case the price of the stock rises you get the full benefit of the price rise. In case the price of the stock falls, exercise the Put Option (remember Put is a right to sell). You have capped your loss in this manner because the Put option stops your further losses. It is a strategy with a limited loss and (after subtracting the Put premium) unlimited profit (from the stock price rise). The result of this strategy looks like a Call Option Buy strategy and therefore is called a Synthetic Call! But the strategy is not Buy Call Option (Strategy 1). Here you have taken an exposure to an underlying stock with the aim of holding it and reaping the benefits of price rise, dividends, bonus rights etc. and at the same time insuring against an adverse price movement. In simple buying of a Call Option, there is no underlying position in the stock but is entered into only to take advantage of price movement in the underlying stock. When to use: When ownership is desired of stock yet investor is concerned about nearterm downside risk. The outlook is conservatively bullish. Risk: Losses limited to Stock price + Put Premium Put Strike price Reward: Profit potential is unlimited. Break-even Point: Put Strike Price + Put Premium + Stock Price Put Strike Price
ANALYSIS: This is a low risk strategy. This is a strategy which limits the loss in case of fall in market but the potential profit remains unlimited when the stock price rises. A good strategy when you buy a stock for medium or long term, with the aim of protecting any downside risk. The pay-off resembles a Call Option buy and is therefore called as Synthetic Long Call.
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4.4.4 LONG PUT

Buying a Put is the opposite of buying a Call. When you buy a Call you are bullish about the stock / index. When an investor is bearish, he can buy a Put option. A Put Option gives the buyer of the Put a right to sell the stock (to the Put seller) at a pre-specified price and thereby limit his risk. A long Put is a Bearish strategy. To take advantage of a falling market an investor can buy Put options. When to use: Investor is bearish about the stock / index. Risk: Limited to the amount of Premium paid. (Maximum loss if stock / index expires at or above the option strike price). Reward: Unlimited Break-even Point: Stock Price - Premium
ANALYSIS: A bearish investor can profit from declining stock price by buying Puts. He limits his risk to the amount of premium paid but his profit potential remains unlimited. This is one of the widely used strategy when an investor is bearish.
4.5.5. SHORT PUT

Selling a Put is opposite of buying a Put. An investor buys Put when he is bearish on a stock. An investor Sells Put when he is Bullish about the stock expects the stock price to rise or stay sideways at the minimum. When you sell a Put, you earn a Premium (from the buyer of the Put). You have sold someone the right to sell you the stock at the strike price. If the stock price increases beyond the strike price, the short put position will make a profit for the seller by the amount of the premium, since the buyer will not exercise the Put option and the Put seller can retain the Premium (which is his maximum profit). But, if the stock price decreases below the strike price, by more than the amount of the premium, the Put seller will lose money. The potential loss being unlimited (until the stock price fall to zero). A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY
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When to Use: Investor is very Bullish on the stock / index. The main idea is to make a short term income. Risk: Put Strike Price Put Premium. Reward: Limited to the amount of Premium received. Breakeven: Put Strike Price - Premium
ANALYSIS: Selling Puts can lead to regular income in a rising or range bound markets. But it should be done carefully since the potential losses can be significant in case the price of the stock / index falls. This strategy can be considered as an income generating strategy.
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CHAPTER 5
REPORTS AND CONCLUSION
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5.1
REPORTS AND EXPERIENCE
Working at NARNOLIA SECURITIES LIMITED was largely an overwhelming experience with gaining insights to a number of new things. The On-The Job experience made it a worthwhile Internship, which gave me a great real time Industry experience. All is not the same in real life as we read in books and on net about the working methods of different divisions and segments. Each segment in an organization has its own work culture followed by the members. I had to put in my own efforts and take initiative to learn and gain maximum knowledge possible during this period. Primarily, the description of my work as a Management Trainee was to gain knowledge about OPTIONS. The work assigned definitely required awareness and understanding of the all the investment options available and there uses. Any investment option will carry risk, I was required to know how OPTIONS reduces risk and why shall it be looked upon as an investment option. I in NARNOLIA SECURITIES LIMITED learned about different ways to invest which will help me to boost up my profits. During the entire internship process I was told to do assignments. Doing assignments was very challenging. I was required to do assignments on all investment options available and after completing my assignments I was able to decide that OPTIONS is the investment avenue where people can park their money. Though it requires little knowledge and understanding, but once the concept is clear it is a useful tool to generate profits. I also did company study on L&T and Wipro Technologies Limited which gave me insights about these companies.
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5.1.1 WEEKLY LEARNING PROCESS AT NARNOLIA SECURITIES LIMITED WEEK 1 About the company I was told about the different operations being carried out in that particular branch. I was explained how each operation is done and how they are linked with each other. The different processes carried out are: Mutual Funds IPOs FPOs Stock Broking Financial Advisory Investment planning About their different business I was explained about the different products and services in which the Narnolia Securities deals in. Each of the products and services is designed specially to cater to the needs of the fellow clients. INVESTMENT & TRADING IN SHARES INVESTMENT IN EQUITY DERIVATIVES INVESTMENT THROUGH MUTUAL FUNDS PRIMARY MARKET DEPOSITORY SERVICES COMMODITY
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About their future plans I was explained about what the company is going to do in the near future. They explained about what new businesses they are planning to get into. Some the new businesses they are planning to get into are: Corporate Financial Advisory Merger and Acquisitions Consultancy
About the procedures and hierarchy followed by the company I was explained how the hierarchy in the company and in the different branches work. I was explained how each process is linked to each other and how the communication channel works. About what I have to do and how I have to go about it I was explained what I have to do and how the whole training of mine will go about. I was explained whom to report to and what is the communication channel going to be for me. I was told to be working under the financial advisory team for SMEs. I had to observe the different processes going in their office I had to sit with the people incharge of different processes and see how the work in that particular process worked. I observed the way all of the processes co-ordinated with each other.
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WEEK 2 I was given a brief introduction about the Indian financial structure and how it works and about its regulator, was briefed with the Stock Exchanges of India. (BSE, NSE etc.). I was briefed with different analysis (Fundamental and Technical analysis) and their significance. I was briefed about different trading calls and their applications in trading session. I was even taught how the regulators play important role in order to insure fair trade practices. We discussed about the Sensex and Nifty, how it gets calculated and criteria for listing in SENSEX. I learned about important terms which are essential for trading, their significance and importance (BNST, STBT etc.)
WEEK 3 I learned about Elliot wave theory and candle stick chart of technical analysis and its application. We discussed about different markets and their importance in the economy (Primary, Secondary, Bond etc). I was assigned to do a company study (L&T and WIPRO and there influence on capital markets and its analysis. I learned about mergers and its importance and how company use it as a tool to dominate their competitors. I learned about the Mutual Funds and different schemes available for investors. I learned about the Mutual Funds and different schemes available for investors.
WEEK 4 I learned about the Mutual Funds and different schemes available for investors. I learned about SIPs, SWPs and STPs and their importance in investments. I learned about the importance of AMFI in mutual fund industry. I learned about SEBI guidelines for IPO listing. I learned about difference between Cash Market and Derivatives. I learned about the FUTURES and how it is used as a tool for hedging.
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WEEK 5 I learned about the FUTURES and how it is used as a tool for hedging. I was briefed about OPTIONS and its importance. I was briefed about OPTIONS and its importance. I was briefed about OPTIONS and its importance. I learned about different types of options. (Call, Put). I learned about European Style / call for options.
WEEK 6 I learned about the American Style / call of options. I learned about how discount and premium works with options. I learned about the strategies of OPTIONS. I learned about the strategies of OPTIONS. I went through a practical session of trading in options. I learned about the strategies of OPTIONS. I learned about the strategies of OPTIONS. Preparation and submission of project
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5.2
CONCLUSION
Interning at NARNOLIA SECURITIES LIMITED, RANCHI, was an enriching experience. Though as an intern my main motive was to learn more about PORTFOLIO MANAGEMENT SERVICES (PMS) but the facilitator focused more on options because I had knowledge about PMS but not about OPTIONS. After learning about OPTIONS I concluded that I had been ignoring a very useful investment avenue. NARNOLIA SECURITIES LIMITED as an organization caters to the need of retail investors by educating them about pros and cons of investments and facilitating the best suitable portfolio for their clients. In spite of the fact that its presence is restricted to the eastern India, it has never compromised on the quality and variety of services. The reason for the success of Narnolia Securities Limited is the quality research center, experts and relationship executives they have. I personally was influenced by the customization services they offer to each and every client. As an intern I was also encouraged to work on PMS but the councilor found that learning about OPTIONS will be more useful. Lastly. I would like to thank NARNOLIA SECUTITIES LIMITED for giving me valuable time and learning guidance on OPTIONS.
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CHAPTER 1

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

India in Global Markets

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

Measures Taken by Indian Govt.

institutional Liberalization of stock investment in order to boost economic growth.

investors to invest in equity market to attract foreign and debt markets

Allowing Indian companies to issues ADRS and GDRS

integration and give freedom to the

Allow Indian nationals and companies to invest abroad

BSE and NSE to set up and To maintain corporate

bond information relating to trading. Investor protection

Making PAN compulsory

(Know Your Client)

necessarily Investor protection and It was made mandatory.

companies and investors

Table 1: Some important measures taken by govt.

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

Market Size and Characteristics

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

Magadh Mangalore National SE OTCEI Pune Saurashtra Kutch UPSE Vadaodara

198 66 1014 769 192 426 463 311

Table 3: Numbers of brokers and sub brokers.

Table 5 : Numbers of client added

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

Rs. Crore PAT

Rs. Crore Net worth

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

PRODUCT GRID FOR BROKERAGE INDUSTRY

Margin funding Depository services Portfolio mgt.

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

Table 9: Comparative Analysis

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

Global Securities Market

Recent Regulations in Stock Market

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

PORTERS FIVE FORCES

Diagram 2: Porters Five Forces

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

SWOT ANALYSIS ON BROKERAGE INDUSTRY

Multiples engines of growth- an integrated platform financial services

Table 10: SWOT ANALYSIS

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

NARNOLIA SECURITIES LIMITED, RANCHI

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

2. NARNOLIA SECURITIES LIMITED

2.1. The Beginning

1999 First branch opened in Dhanbad.

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

Recognized by Reliance Life as the best CDA in the country.

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

LOCATION 1 3 7 11 16 27 38 86 126 156 178 200 225

NO. OF EMPLOYEES 6 16 28 38 60 94 133 221 450 525 600 700 900

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

2.2. VISION AND MISSION VISION

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY

Anup Kumar Singh Deepak Kumar

A STUDY ON HOW OPTIONS AND ITS STRATIGIES HELP TO MAKE MONEY