INTRODUCTION

1.1 A STUDY ON DERIVATIVES: The only stock exchanges operating in the 19 the century were those of Bombay set up in 1875 and Ahmedabad set up in 1894. These were organized as voluntary non-profit-making association of brokers to regulate and protect their interests. Before the control on securities trading became a central subject under the constitution in 1950, it was a state subject and the Bombay securities contracts (control) Act of 1925 used to regulate trading in securities. Under this Act, The Bombay stock exchange was recognized in 1927 and Ahmedabad in 1937. During the war boom, a number of stock exchanges were organized even in Bombay, Ahmedabad and other centers, but they were not recognized. Soon after it became a central subject, central legislation was proposed and a committee headed by A.D.Gorwala went into the bill for securities regulation. On the basis of the committee's recommendations and public discussion, the securities contracts (regulation) Act became law in 1956.

1.1.1 OBJECTIVES OF STUDY: 1. To study various trends in derivative market. 2. Comparison of the profits/losses in cash market and derivative market. 3. To find out profit/losses position of the option writer and option holder. 4. To study in detail the role of the future and options. 5. To study the role of derivatives in Indian financial market. 6. To study various trends in derivative market. 7. Comparison of the profits/losses in cash market and derivative market. 2

8. To find out profit/losses position of the option writer and option holder. 9. To study in detail the role of the future and options. 10. To study the role of derivatives in Indian financial market.

1.1.2 NEED OF THE STUDY

Different investment avenues are available investors. Stock market also offers good investment opportunities to the investor alike all investments, they also carry certain risks. The investor should compare the risk and expected yields after adjustment off tax on various instruments while talking investment decision the investor may seek advice from expartry and consultancy include stock brokers and analysts while making investment decisions. The objective here is to make the investor aware of the functioning of the derivatives. Derivatives act as a risk hedging tool for the investors. The objective if to help the investor in selecting the appropriate derivates instrument to the attain maximum risk and to construct the portfolio in such a manner to meet the investor should decide how best to reach the goals from the securities available. To identity investor objective constraints and performance, which help formulate the investment policy? The develop and improvement strategies in the with investment policy formulated. They will help the selection of asset classes and securities in each class depending up on their risk return attributes.

1.1.3 SCOPE OF THE STUDY The study is limited to Derivatives with special reference to futures and options in the Indian context; the study is not based on the international perspective of derivative markets.

The study is limited to the analysis made for types of instruments of derivates each strategy is analyzed according to its risk and return characteristics and derivatives performance against the profit and policies of the company.

1.1.4 LIMITATION OF THE STUDY The subject of derivates if vast it requires extensive study and research to understand the dept of the various instrument operating in the market only a recent plenomore. But various international examples have also been added to make the study more comfortable. There are various other factors also which define the risk and return preferences of an investor how ever the study was only contained towards the risk maximization and profit maximization objective of the investor. The derivative market is a dynamic one premiums, contract rates strike price fluctuate on demand and supply basis. Therefore data related to last few trading months was only consider and interpreted.

1.2 DEFINITION OF STOCK EXCHANGE: "Stock exchange means any body or individuals whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities." It is an association of member brokers for the purpose of self-regulation and protecting the interests of its members. It can operate only if it is recognized by the Government under the securities contracts (regulation) Act, 1956. The recognition is granted under section 3 of the Act by the central government, Ministry of Finance.

BYLAWS: Besides the above act, the securities contracts (regulation) rules were also made in 1957 to regulate certain matters of trading on the stock exchanges. There are also bylaws of the exchanges, which are concerned with the following subjects. Opening/closing of the stock exchanges, timing of trading, regulation of blank transfers, regulation of badla or carryover business, control of the settlement and other activities of the stock exchange, fixation of margins, fixation of market prices or making up prices, regulation of taravani business (jobbing), etc., regulation of brokers trading, brokerage charges, trading rules on the exchange, arbitration and settlement of disputes, settlement and clearing of the trading etc.

1.2.1 REGULATION OF STOCK EXCHANGES: The securities contracts (regulation) act is the basis for operations of the stock exchanges in India. No exchange can operate legally without the government permission or recognition. Stock exchanges are given monopoly in certain areas under section 19 of the above Act to ensure that the control and regulation are facilitated. Recognition can be granted to a stock exchange provided certain conditions are satisfied and the necessary information is supplied to the government. Recognition can also be withdrawn, if necessary. Where there are no stock exchanges, the government can license some of the brokers to perform the functions of a stock exchange in its absence.

1.2.2 SECURITIES AND EXCHANGE BOARD OF INDIA(SEBI): SEBI was set up as an autonomous regulatory authority by the Government of India in 1988 " to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto." It is empowered by two acts namely the SEBI Act, 1992 and the securities contract(regulation)Act, 1956 to perform the function of protecting investor's rights and regulating the capital markets.

1.2.3 BOMBAY STOCK EXCHANGE This stock exchange, Mumbai, popularly known as "BSE" was established in 1875 as " The Native share and stock brokers association", as a voluntary non-profit making association. It has an evolved over the years into its present status as the premiere stock exchange in the country. It may be noted that the stock exchanges the oldest one in Asia, even older than the Tokyo Stock exchange which was founded in 1878. The exchange, while providing an efficient and transparent market for trading in securities, upholds the interests of the investors and ensures redressed of their grievances, whether against the companies or its own member brokers. It also strives to educate and enlighten the investors by making available necessary informative inputs and conducting investor education programmes. A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public representatives and an executive director is the apex body, which decides the policies and regulates the affairs of the exchange. The Executive director as the chief executive officer is responsible for the day today administration of the exchange. The average daily turnover of the exchange during the year 2000-01(April-March) was Rs 3984.19 crs and average number of daily trades 5.69 laces. However the average daily turnover of the exchange during the

year 2001-02 has declined to Rs. 1244.10 crs and number of average daily trades during the period to 5.17 laces.The average daily turn over of the exchange during the year 2002-03 has declined and number of average daily trades during the period is also decreased. The Ban on all deferral products like BLESS AND ALBM in the Indian capital markets by SEBI i.e. July 2, 2001, abolition of account Period settlements, introduction of compulsory rolling settlements in all scrips traded on the exchanges i.e. Dec 31,2001, etc., have adversely impacted the liquidity and consequently there is a considerable decline in the daily turn over at the exchange. The average daily turn over of the exchange present scenario is 110363 (Laces) and number of average daily trades 1057(Laces)

BSE INDICES: In order to enable the market participants, analysts etc., to track the various ups and downs in the Indian stock market, the Exchange has introduced in 1986 an equity stock index called BSE-SENSEX that subsequently became the barometer of the moments of the share prices in the Indian stock market. It is a "Market capitalization-weighted" index of 30

component stocks representing a sample of large, well-established and leading companies. The base year of Sensex is 1978-79. The Sensex is widely reported in both domestic and

international markets through print as well as electronic media. Sensex is calculated using a market capitalization weighted method. As per this

methodology, the level of the index reflects the total market value of all 30-component stocks from different industries related to particular base period. The total market value of a company is determined by multiplying the price of its stock by the number of shares outstanding. Statisticians call an index of a set of combined variables (such as price and number of shares) a composite Index. An Indexed number is used to represent the results of this calculation in order to make the value easier to work with and track over a time. It is much easier to graph a chart based on Indexed values than one based on actual values world over majority of the well-known Indices are constructed using Market capitalization weighted method ". In practice, the daily calculation of SENSEX is done by dividing the aggregate market value of the 30 companies in the Index by a number called the Index Divisor. The Divisor is the only link to the original base period value of the SENSEX. The Divisor keeps the Index comparable over a period of time and if the reference point for the entire Index maintenance adjustments. SENSEX is widely used to describe the mood in the Indian Stock markets. Base year average is changed as per the formula New base year average = Old base year average*(New market Value/old market value)

1.2.4 NATIONAL STOCK EXCHANGE The NSE was incorporated in Nov 1992 with an equity capital of Rs. 25 crs. The International securities consultancy (ISC) of Hong Kong has helped in setting up NSE. ISC has prepared the detailed business plans and installation of hardware and software systems. The promotions for NSE were financial institutions, insurances companies, banks and SEBI capital market ltd, Infrastructure leasing and financial services ltd and stock holding corporation ltd. It has been set up to strengthen the move towards professionalisation of the capital market as well as provide nation wide securities trading facilities to investors. NSE is not an exchange in the traditional sense where brokers own and manage the exchange. A two tier administrative set up involving a company board and a governing aboard of the exchange is envisaged. NSE is a national market for shares PSU bonds, debentures and government securities since infrastructure and trading facilities are provided. NSE - NIFTY:

The NSE on April 22, 1996 launched a new equity Index. The NSE-50. The new Index which replaces the existing NSE-100 Index is expected to serve as an appropriate Index for the new segment of futures and options. Nifty " means National Index for Fifty Stocks. The NSE-50 comprises 50 companies that represent 20 broad Industry groups with an aggregate market capitalization of around Rs. 1,70,000 crs. All companies included in the Index have a market capitalization in excess of Rs 500 crs each and should have traded for 85% of trading days at an impact cost of less than 1.5%. The base period for the index is the close of prices on Nov 3, 1995, which makes one year of completion of operation of NSEs capital market segment. The base value of the Index has been set at 1000. 9

NSE - MIDCAP INDEX: The NSE midcap Index or the Junior Nifty comprises 50 stocks that represents 21 board Industry groups and will provide proper representation of the midcap segment of the Indian capital Market. All stocks in the Index should have market capitalization of greater than Rs. 200 crs and should have traded 85% of the trading days at an impact cost of less 2.5%. The base period for the index is Nov 4, 1996, which signifies two years for completion of operations of the capital market segment of the operations. The base value of the Index has been set at 1000. Average daily turn over of the present scenario 258212 (Lacs) and number of average daily trades 2160 (Lacs). At present, there are 24 stock exchanges recognized under the securities contract (regulation) Act, 1956. They are List of Stock Exchanges recognized under the securities contract (regulation) Act, 1956 NAME OF THE STOCK EXCHANGE Bombay stock exchange, Ahmedabad share and stock brokers association Calcutta stock exchange association Ltd, Delhi stock exchange association Ltd, Madras stock exchange association Ltd, Indoor stock brokers association, Bangalore stock exchange, Hyderabad stock exchange, Cochin stock exchange, 1875 1957 1957 1957 1957 1958 1963 1943 YEAR

10

Pune stock exchange Ltd, U.P stock exchange association Ltd, Ludhiana stock exchange association Ltd, Jaipur stock exchange Ltd, Gauhathi stock exchange Ltd, Mangalore stock exchange Ltd, Maghad stock exchange Ltd, Patna, Bhubaneshwar stock exchange association Ltd, Over the counter exchange of India, Bombay, Saurasthra kutch stock exchange Ltd, Vsdodara stock exchange Ltd, Coimbatore stock exchange Ltd, The meerut stock exchange Ltd, 1National stock exchange Ltd, Integrated stock exchange,

1978 1982 1982 1983 1983-84 1984 1985 1986 1989 1989 1990 1991 1991 1991 1991,1999

11

1.3 DERIVATIVES MEANING: The emergence of the market for derivative products, most notably forwards, futures and options, can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, the financial markets are marked very high degree of volatility. Through the use of derivative products, it is possible to partially or fully transfer price risks by locking-in asset prices. As instruments of risk management, these generally do not influence the fluctuations in the underlying asset prices. However, by locking-in asset prices, derivative products minimize the impact of fluctuations in asset prices on the profitability and cash flow situation of risk-averse investors. Derivatives are risk management instruments, which derive their value from an underlying asset. The underlying asset can be bullion, index, share, bonds, currency, interest etc. Annual turnover of the derivatives is increasing each year from 1986 onwards, Year 1986 1992 1998 2002 & 2003 Annual turnover 146 millions 453 millions 1329 millions it has reached to equivalent stage of cash market

Derivatives are used by banks, securities firms, companies and investors to hedge risks, to gain access to cheaper money and to make profits Derivatives are likely to grow even at a faster rate in future they are first of all cheaper to world have met the increasing volume of products tailored to the needs of particular customers, trading in derivatives has increased even in the over the counter markets.

12

In Britain unit trusts allowed to invest in futures & options .The capital adequacy norms for banks in the European Economic Community demand less capital to hedge or speculate through derivatives than to carry underlying assets. Derivatives are weighted lightly than other assets that appear on bank balance sheets. The size of these off-balance sheet assets that include derivatives is more than seven times as large as balance sheet items at some American banks causing concern to regulators

1.3.1 DEFINITION: Derivative is a product whose value is derived from the value of one or more basic variables, called bases (underlying asset, index, or reference rate), in a contractual manner. The underlying asset can be equity, forex, commodity or any other asset. In the Indian context the Securities Contracts (Regulation) Act, 1956 (SC(R) A) defines derivative to include1. A security derived from a debt instrument, share, and loan whether secured or unsecured, risk instrument or contract for differences or any other form of security. 2. A contract, which derives its value from the prices, or index of prices, of underlying securities. Derivatives are the securities under the SC(R)A and hence the trading of derivatives is governed by the regulatory framework under the SC(R)A.

1.3.2 PARTICIPANTS IN THE DERIVATIVES MARKET The following three broad categories of participants who trade in the derivatives market: 1. Hedgers 2. Speculators and 3. Arbitrageurs 13

Hedgers: Hedgers face risk associated with the price of an asset. They use futures or options markets to reduce or eliminate this risk.

Speculators: Speculators wish to bet on future movements in the price of an asset. Futures and Options contracts can give them an extra leverage; that is, they can increase both the potential gains and potential losses in a speculative venture.

Arbitrageurs: Arbitrageurs are in business to take advantage of a discrepancy between prices in two different markets. For example, they see the futures price of an asset getting out of line with the cash price; they will take offsetting positions in the two markets to lock in a profit.

1.3.4 FUNCTIONS OF THE DERIVATIVES MARKET: The derivatives market performs a number of economic functions. They are: 1. Prices in an organized derivatives market reflect the perception of market participants about the future and lead the prices of underlying to the perceived future level. 2. Derivatives, due to their inherent nature, are linked to the underlying cash markets. With the introduction of derivatives, the underlying market witnesses higher trading volumes because of participation by more players who would not otherwise participate for lack of an arrangement to transfer risk. 3. Speculative trades shift to a more controlled environment of derivatives market. In the absence of an organized derivatives market, speculators trade in the underlying cash markets. 4. An important incidental benefit that flows from derivatives trading is that it acts as a catalyst for new entrepreneurial activity. 5. Derivatives markets help increase savings and investment in the long run. Transfer of risk enables market participants to expand their volume of activity.

14

1.3.5 TYPES OF DERIVATIVES The most commonly used derivatives contracts are forwards, futures and options. Here various derivatives contracts that have come to be used are given briefly:

1. Forwards 2. Futures 3. Options 4. Warrants 5. LEAPS 6. Baskets 7. Swaps 8. Swaptions

1. Forwards: A forward contract is customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price

2. Futures: A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts.

3. Options: Options are of two types calls and puts

Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before.a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date.

15

4. Warrants: Options generally have two lives of up to one year, the majority of options traded on options exchanges having a minimum maturity of nine months. Longer-dated options are called warrants and are generally traded over-the-counter. 5. Leaps: The acronym LEAPS means Long-term Equity Anticipation Securities. These are options having a maturity of up to three years.

6. Baskets: Basket options are options on portfolios of underlying assets. The underlying asset is usually a moving average of a basket of assets. Equity index options are a form of basket options.

7. Swaps: Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula. They can be regarded as portfolios of forward contracts. The two commonly used swaps are:

Interest rate swaps: These entail swapping only the interest related cash flows between the parties in the same currency. Currency swaps: These entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite direction.

8. Swaptions: Swaptions are options to buy or sell that will become operative at the expiry of the options. Thus a swaption is an option on a forward swap. Rather than have calls and puts, the swaptions markets has receiver swaptions and payer swaptions. A receiver swaption is an option to receive fixed and pay floating. A payer swaption is an option to pay fixed and receive floating. 16

1.3.6 DERIVATIVES INSTRUMENTS IN INDIA The first derivative product to be introduced in the Indian securities market is going to be "INDEX FUTURES". In the world, first index futures were traded in U.S. on Kansas City Board of Trade (KCBT) on Value Line Arithmetic Index (VLAI) in 1982. Organized exchanges began trading options on equities in 1973, where as exchange traded debt options did not appear until 1982, on the other hand fixed income futures began trading in 1975, but equity related futures did not begin until 1982.

1.3.7 DERIVATIVES SEGMENT IN BSE & NSE On June 9,2000 BSE & NSE became the first exchanges in India to introduce trading in exchange traded derivative product with the launch of index futures on sense and Nifty futures respectively. Index futures was follows by launch of index options in June 2001, stock options in July 2001 and stock futures in Nov 2001.Presently stock futures and options available on 41 wellcapitalized and actively traded scripts mandated by SEBI. Nifty is the underlying asset of the Index Futures at the Futures & Options segment of NSE with a market lot of 200 and the BSE 30 Sensex is the underlying stock index with the market lot of 50. This difference of market lot arises due to a minimum specification of a contract value of Rs. 2 lakhs by Securities Exchange Board of India. A contract value is contracting Index laid by its market lot. For e.g. If Sensex is 4730 then the contract value of a futures Index having Sensex as underlying asset will Be 50 x 4730 = Rs. 2,36,500. Similarly if Nifty is 1462.7, its futures

contract value will be 200 x 1462.7 = Rs.2, 92,540/-. Every transaction shall be in multiple of market lot. Thus, Index futures at NSE shall be traded in multiples of 200 and at BSE in multiples of 50

17

1.3.8 CONTRACT PERIODS: At any point of time there will always be available near three months contract periods. For e.g. in the month of June 2009 one can enter into either June Futures contract or July Futures contract or August Futures Contract. The last Thursday of the month specified in the contract shall be the final settlement date for that contract at both NSE as well BSE. Thus June 29, July 27 and August 31 shall be the last trading day or the final settlement date for June Futures contract, July Futures Contract and August Futures Contract respectively. When one futures contract gets expired, a new futures contract will get introduced automatically. For instance, on 30th June, June futures contract becomes invalidated and a September Futures Contract gets activated.

1.3.9 SETTLEMENT: Settlement of all Derivatives trades is in cash mode. There is Daily as well as Final Settlement. Outstanding positions of a contract can remain open till the last Thursday of that month. As long as the position is open, the same will be marked to Market at the Daily Settlement Price, the difference will be credited or debited accordingly and the position shall be brought forward to the next day at the daily settlement price. Any position which remains open at the end of the final settlement day (i.e., last Thursday) shall be closed out by the Exchange at the Final Settlement Price which will be the closing spot value of the underlying (Nifty or Sensex, or respective stocks as the case may be).

18

1.3.10 Regulation for Derivatives Trading SEBI set up a 24-member committee under Chairmanship of Dr.L.C. Gupta to develop the appropriate regulatory framework for derivatives trading in India. The committee submitted its report in March 1998. On May 11, 1998 SEBI accepted the recommendations of the committee and approved the phased introduction of derivatives trading in India beginning with stock index futures. SEBI also approved the suggestive bye-laws recommended by the committee for regulation and control of trading and settlement of derivatives contracts. The provisions in the SC(R) A and the regulatory framework developed there under govern trading in securities. The amendment of the SC(R) A to include derivatives within the ambit of securities in the SC(R) A made trading in derivatives possible within the framework of the Act. 1. Any exchange fulfilling the eligibility criteria as prescribed in the L C Gupta committee report may apply to SEBI for grant of recognition under Section 4 of the SC(R) a, 1956 to start trading derivatives. The derivatives exchange/segment should have a separate governing council and representation of trading / clearing members shall be limited to maximum of 40% of the total members of the governing council. The exchange shall regulate the sales practices of its members and will obtain approval of SEBI before start of trading in any derivative contract 2. The exchange shall have minimum 50 members. 3. The members of an existing segment of the exchange will not automatically become the members of derivative segment. The members of the derivative segment need to fulfill the eligibility conditions as laid down by the L C Gupta committee. 4. The clearing and settlement of derivatives trades shall be through a SEBI approved clearing corporation / house. Clearing corporation / houses complying with the eligibility conditions as laid down by the committee have to apply to SEBI for grant of approval. 5. Derivative brokers/dealers and clearing members are required to seek registration from SEBI. 6. The minimum contract value shall not be less than Rs. 2 Lakh. Exchanges should also submit details of the futures contract they propose to introduce. 7. The trading members are required to have qualified approved user and sales person who have passed a certification programme approved by SEBI. 19

While from the purely regulatory angle, a separate exchange for trading would be a better arrangement. Considering the constraints in infrastructure facilities, the existing stock (cash) exchanges may also be permitted to trade derivatives subject to the following conditions.

I. Trading should take place through an on-line screen based trading system. II. An independent clearing corporation should do the clearing of the derivative market. III. The exchange must have an online surveillance capability, which monitors positions, price and volumes in real time so as to deter market manipulation price and position limits should be used for improving market quality. IV. Information about trades quantities, and quotes should be disseminated by the exchange in the real time over at least two information-vending networks, which are accessible to investors in the country. V. The exchange should have at least 50 members to start derivatives trading. VI. The derivatives trading should be done in a separate segment with separate membership; That is, all members of the cash market would not automatically become members of the derivatives market. VII. The derivatives market should have a separate governing council which should not have representation of trading by clearing members beyond whatever percentage SEBI may prescribe after reviewing the working of the present governance system of exchanges. VIII. The chairman of the governing council of the derivative division / exchange should be a member of the governing council. If the chairman is broker / dealer, then he should not carry on any broking or dealing on any exchange during his tenure. IX. No trading/clearing member should be allowed simultaneously to be on the governing council both derivatives market and cash market.

20

FUTURES

21

2.1 FUTURES Futures contract is a firm legal commitment between a buyer & seller in which they agree to exchange something at a specified price at the end of a designated period of time. The buyer agrees to take delivery of something and the seller agrees to make delivery.

2.2 STOCK INDEX FUTURES Stock Index futures are the most popular financial futures, which have been used to hedge or manage the systematic risk by the investors of Stock Market. They are called hedgers who own portfolio of securities and are exposed to the systematic risk. Stock Index is the apt hedging asset since the rise or fall due to systematic risk is accurately shown in the Stock Index. Stock index futures contract is an agreement to buy or sell a specified amount of an underlying stock index traded on a regulated futures exchange for a specified price for settlement at a specified time future. Stock index futures will require lower capital adequacy and margin requirements as compared to margins on carry forward of individual scrips. The brokerage costs on index futures will be much lower. Savings in cost is possible through reduced bid-ask spreads where stocks are traded in packaged forms. The impact cost will be much lower in case of stock index futures as opposed to dealing in individual scrips. The market is conditioned to think in terms of the index and therefore would prefer to trade in stock index futures. Further, the chances of manipulation are much lesser. The Stock index futures are expected to be extremely liquid given the speculative nature of our markets and the overwhelming retail participation expected to be fairly high. In the near future, stock index futures will definitely see incredible volumes in India. It will be a blockbuster product and is pitched to become the most liquid contract in the world in terms of number of contracts traded if not in terms of notional value. The advantage to the equity or cash market is in the fact that they would become less volatile as most of the speculative activity would shift to stock index futures. The stock index futures market should ideally have more

22

depth, volumes and act as a stabilizing factor for the cash market. However, it is too early to base any conclusions on the volume or to form any firm trend. The difference between stock index futures and most other financial futures contracts is that settlement is made at the value of the index at maturity of the contract.

2.3 FUTURES TERMINOLOGY

Contract Size The value of the contract at a specific level of Index. It is Index level * Multiplier.

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

is the price per index point. Tick Size It is the minimum price difference between two quotes of similar nature. Contract Month The month in which the contract will expire. Expiry Day The last day on which the contract is available for trading. Open interest Total outstanding long or short positions in the market at any specific point in time. As total long positions for market would be equal to total short positions, for calculation of open Interest, only one side of the contracts is counted.

23

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

week or during a month. Long position Outstanding/unsettled purchase position at any point of time. Short position Outstanding/ unsettled sales position at any point of time. Open position Outstanding/unsettled long or short position at any point of time. Physical delivery Open position at the expiry of the contract is settled through delivery of the underlying. In futures market, delivery is low. Cash settlement Open position at the expiry of the contract is settled in cash. These contracts Alternative Delivery Procedure (ADP) - Open position at the expiry of the contract is settled by two parties - one buyer and one seller, at the terms other than defined by the exchange. World wide a significant portion of the energy and energy related contracts (crude oil, heating and gasoline oil) are settled through Alternative Delivery Procedure.

24

2.4 Pay off for futures: A Pay off is the likely profit/loss that would accrue to a market participant with change in the price of the underlying asset. Futures contracts have linear payoffs. In simple words, it means that the losses as well as profits, for the buyer and the seller of futures contracts, are unlimited.

Pay off for Buyer of futures: (Long futures) The pay offs for a person who buys a futures contract is similar to the pay off for a

person who holds an asset. He has potentially unlimited upside as well as downside. Take the case of a speculator who buys a two-month Nifty index futures contract when the Nifty stands at 1220. The underlying asset in this case is the Nifty portfolio. When the index moves up, the long futures position starts making profits and when the index moves down it starts making losses . Pay off for seller of futures: (short futures) The pay offs for a person who sells a futures contract is similar to the pay off for a person who shorts an asset. He has potentially unlimited upside as well as downside. Take the case of a speculator who sells a two-month Nifty index futures contract when the Nifty stands at 1220. The underlying asset in this case is the Nifty portfolio. When the index moves down, the short futures position starts making profits and when the index moves up it starts making losses.

25

OPTIONS

26

3.1 OPTIONS

An option agreement is a contract in which the writer of the option grants the buyer of the option the right to purchase from or sell to the writer a designated instrument at a specific price within a specified period of time. Certain options are shorterm in nature and are issued by investors another group of options are long-term in nature and are issued by companies.

3.2 OPTIONS TERMINOLOGY:

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

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

Expiration date: It is the date on which the option contract expires.

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

during the life of the option Premium: Is the price the buyer pays the writer for an option contract. Writer: The term writer is synonymous to the seller of the option contract. Holder: The term holder is synonymous to the buyer of the option contract.

27

Straddle: A straddle is combination of put and calls giving the buyer the right to either buy or sell stock at the exercise price. Strip: A strip is two puts and one call at the same period.

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

Spread: A spread consists of a put and a call option on the same security for the same time period at different exercise prices. The option holder will exercise his option when doing so provides him a benefit over

buying or selling the underlying asset from the market at the prevailing price. These are three possibilities. 1. In the money: An option is said to be in the money when it is

advantageous to exercise it. 2. Out of the money: The option is out of money if it not advantageous to exercise it. 3. At the money: IF the option holder does not lose or gain whether he exercises his option or buys or sells the asset from the market, the option is said to be at the money. The exchanges initially created three expiration cycles for all listed options and each issue was assigned to one of these three cycles. January, April, July, October. February, March, August, November. March, June, September, and December.

In India, all the F and O contracts whether on indices or individual stocks are available for one or two or three months series and they expire on the Thursday of the concerned month. 28

3.3 CALL OPTION: An option that grants the buyer the right to purchase a designated instrument is called a call option. A call option is a contract that gives its owner the right, but not the obligation, to buy a specified price on or before a specified date. An American call option can be exercised on or before the specified date only. European options can be exercised on the specified date only. 3.4 PUT OPTION: An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time. This is the opposite of a call option, which gives the holder the right to buy shares. A put becomes more valuable as the price of the underlying stock depreciates relative to the strike price. For example, if you have one Mar 09 Taser 10 put, you have the right to sell 100 shares of Taser at $10 until March 2008 (usually the third Friday of the month). If shares of Taser fall to $5 and you exercise the option, you can purchase 100 shares of Taser for $5 in the market and sell the shares to the option's writer for $10 each, which means you make $500 (100 x ($10-$5)) on the put option. Note that the maximum amount of potential proft in this example ignores the premium paid to obtain the put option. 3.5 FACTORS DETERMINIG OPTION VALUE:

Stock price Strike price Time to expiration Volatility Risk free interest rate Dividend

29

3.6 DIFFERENCE BETWEEN FUTURES & OPTION:

FUTURES 1) Both the parties are obligated to perform. 2) With futures premium is paid by either party. 3) The parties to futures contracts must perform

OPTIONS 1) Only the seller (writer) is obligated to perform. 2) With options, the buyer pays the seller a premium.

at the settlement date only. They are not 3) The buyer of an options contract can exercise obligated to perform before that date. any time prior to expiration date.

4) The holder of the contract is exposed to the 4) The buyer limits the downside risk to the option entire spectrum of downside risk and had the potential for all upside return. 5) In futures margins to be paid. They are approximate 15-20% on the current stock price. premium but retain the upside potential. 5) In options premiums to be paid. But they are very less as compared to the margins.

3.7 Advantages of option trading:

Risk management: put option allow investors holding shares to hedge against a possible fall in their value. This can be considered similar to taking out insurance against a fall in the share price.

Time to decide: By taking a call option the purchase price for the shares is locked in. This gives the call option holder until the Expiry day to decide whether or exercised the option and buys the shares. Likewise the taker of a put option has time to decide whether or not to sell the shares.

30

Speculations: The ease of trading in and out of option position makes it possible to trade options with no intention of ever exercising them. If investor expects the market to rise, they may decide to buy call options. If expecting a fall, they may decide to buy put options. Either way the holder can sell the option prior to expiry to take a profit or limit a loss. Trading options has a lower cost than shares, as there is no stamp duty payable unless and until options are exercised.

Leverage: Leverage provides the potential to make a higher return from a smaller initial outlay than investing directly however leverage usually involves more risks than a direct investment in the underlying share. Trading in options can allow investors to benefit from a change in the price of the share without having to pay of the share.

3.8 Summary of options Call option buyer Pays premium Right to exercise and buy the share Profits from rising prices Limited losses, potentially unlimited gain Put option buyer Pays premium Right to exercise and sell shares Profits from falling prices Limited losses, potentially unlimited gain Call option writer (seller) Receives premium Obligation to sell shares if exercised Profits from falling prices or remaining neutral Potentially unlimited losses, limited gain

Put option writer (seller) Receives premium Obligation to buy shares if exercised Profits from rising prices or remaining neutral Potentially unlimited losses, limited gain

31

ABOUT SHAREKHAN

32

4.1 SHAREKHAN
Sharekhan is one of India's largest and leading financial services companies. It is an online stock trading company of SSKI Group (S.S. Kantilal Ishwarlal Securities Limited) which has been a provider of India-based investment banking and corporate finance service for over 80 years. SSKI caters to most of the prominent financial institutions, foreign and domestic, investing in Indian equities. It has been valued for its strong research-led investment ideas, superior client servicing track record and exceptional execution skills. The key features of sharekhan are as follows: You get freedom from paperwork. There are instant credit and money transfer facilities. You can trade from any net enabled PC. After hour orders facilities. You can go for online orders over the phone. Timely advice and research reports Real-time Portfolio tracking. Information and Price alerts. Sharekhan provides assistance and the advice like no one else could. It has created special information tools to help answer any queries. Sharekhans first step program, built specifically for new investors, is testament to of its commitment to being your guide throughout your investing life cycle. 33

4.2 SHAREKHAN SERVICES: The tag line of Sharekhan says that it is your guide to the financial jungle. As per the tag line there are many amazing services that Sharekhan offers like technical research, fundamental research, share shops, portfolio management, dial-n-trade, commodities trade, online services, depository services, equity and derivatives trading (including currency trading). With Sharekhans online trading account, you can buy and sell shares at anytime and from anywhere you like. With a physical presence in over 300 cities of India through more than 800 "Share Shops" with more than 3000 employees, and an online presence through Sharekhan.com, India's premier, it reaches out to more than 8, 00,000 trading customers. A Sharekhan outlet online destination offers the following services: Online BSE and NSE executions (through BOLT & NEAT terminals) Free access to investment advice from Sharekhan's Research team Sharekhan Value Line (a monthly publication with reviews of recommendations, stocks to watch out for etc) Daily research reports and market review (High Noon & Eagle Eye) Pre-market Report (Morning Cuppa) Daily trading calls based on Technical Analysis Cool trading products (Daring Derivatives and Market Strategy) Personalized Advice Live Market Information Depository Services: Demat Transactions 34

 Derivatives Trading (Futures and Options) Commodities Trading IPOs & Mutual Funds Distribution Internet-based Online Trading: Speed Trade Sharekhan has one of the best state-of-art web portals providing fundamental and statistical information across equity, mutual funds and IPOs. Surfing can be done across 5,500 companies for in-depth information, details about more than 1,500 mutual fund schemes and IPO data. Other market related details such as board meetings, result announcements, FII transactions, buying/selling by mutual funds and much more can also be accessed. It provides a complete life-cycle of investment solution in Equities, Derivatives, Commodities, IPO, Mutual Funds, Depository Services, Portfolio Management Services and Insurance. It also offers personalized wealth management services for High Net worth individuals. 4.3 ONLINE SERVICES The online trading account can be chosen as per trading habits and preferences, that is the classic account for most investors and speed trade for active day traders. Sharekhan also provides a free software called Trade tiger to all its account holders. The Classic Account enables you to trade online for investing in Equities and Derivatives on the NSE via sharekhan.com; it gives access to all the research content and also comes with a free Dial-n-Trade service enabling to buy shares using the telephone.

35

Its features are: Streaming quotes (using the applet based system) Multiple watch lists Integrated Banking, demat and digital contracts Instant credit and transfer Real-time portfolio tracking with price alerts and, of course, the assurance of secure transactions The Trade Tiger is a next-generation online trading product that brings the power of the broker's terminal to your PC. It's the perfect trading platform for active day traders. Its features are: A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX, NCDEX, Mutual Funds, IPOs Multiple Market Watch available on Single Screen Multiple Charts with Tick by Tick Intraday and End of Day Charting powered with various Studies Graph Studies include Average, Band- Bollinger, Know Sure Thing, MACD, RSI, etc Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines User can save his own defined screen as well as graph template, that is, saving the layout for future use User-defined alert settings on an input Stock Price trigger Tools available to gauge market such as Tick Query, Ticker, Market Summary, Action Watch, Option Premium Calculator, Span Calculator 36

 Shortcut key for FAST access to order placements & reports Online fund transfer activated with 12 Banks Sharekhan provides you the facility to trade in Commodities through Sharekhan Commodities Pvt. Ltd. a wholly owned subsidiary of its parent SSKI. It trades on two major commodity exchanges of the country: Multi Commodity Exchange of India Ltd, Mumbai (MCX) and National Commodity and Derivative Exchange, Mumbai (NCDEX).

For trading in any commodity, initial margin of around 10% on any commodity is to be maintained. Sharekhan has launched its own commodity derivatives micro-site. The site is available through the Sharekhan home page www.sharekhan.com. Along with the site Sharekhan has launched several commodity derivatives products (both research and trading) too. The products have been listed below: Commodities Buzz: a daily view on precious metals and agro commodities. Commodities Beat: a summary of the days trading activity. Traders Corner: Under commodity trading calls, there are two types of trading calls: Rapid Fire: (short-term calls for 1 day to 5 days updated daily) Medium-term Plays: (medium-term calls for 1 month to 3 months updated weekly or in between if needed) Sharekhan Xclusive: the commodity research reports and analyses (periodical). Market Scan: the daily commodity market data and statistics (end of day). All these products are both e-mailed as newsletters and published on the commodity derivatives site 37

DATA ANALYSIS & INFERENCE

38

GMR INFRASTRUCTURE

39

5.1 GMR Infrastructure

5.1.1 GMR INFRA PROFILE GMR Group is a Bangalore headquartered global infrastructure major with interests in the Airports, Energy, Highways and Urban infrastructure (including SEZ). In addition, the other focus area of the Group is the Agri-business with Sugar as its main productline. The Group is also actively engaged in the areas of Education, Health, Hygiene and Sanitation, Empowerment & Livelihoods and Community-Based Programmes under its Foundation wing, reaffirming its grass root presence as change agents of society in the field of Corporate Social Responsibility. A dedicated division, the GMR Varalakshmi Foundation, manned by committed professionals, oversees and manages these projects across India. With its foray into the Airports sector, the Group has established itself as a front runner and pioneer in the core infrastructure areas of the country. Going forward, the Group will actively seek opportunities in core areas of the countrys infrastructure development including Transportation and Property Development. All these would be driven by a single minded path of translating the vision of the Group by building entrepreneurial organisations that make a difference to society through creation of value.

GMR International GMR Group seeks aggressive growth opportunities, by expanding its business bandwidth and presence in the global market place in the areas of Energy, Airports and property development around airports. International forays will help GMR improve earnings from new opportunities, access international talent and raise international capital at cheaper rates. GMR International - a separate division was formed to harness these opportunities with its head quarters at London. GMR International will embrace the companys Values and Beliefs and will build on its strengths to meet global standards of entrepreneurship, flexibility and effectiveness. It will be a dedicated international organisation with responsibility for investments and operations. As an owner, developer and operator building internationally competitive skills in procurement, operations and maintenance it will leverage GMRs existing strengths in bidding, financing, project management, and partnership development. GMR International manages the Groups maiden foray into the global infrastructure market

40

Projects: The Sabiha Gokcen International Airport InterGen Island Power

Airports Delhi International Airport (P) Limited GMR Hyderabad International Airport Limited Istanbul Sabiha Gokcen International Airport Highways Tambaram - Tindivanam Tuni - Anakapalli Ambala - Chandigarh Adloor - Gundla Pochanpalli Tindivanam - Ulunderpet Farukhnagar - Jadcherla Hyderabad-Vijaywada Chennai Outer Ring Road Agri Business Sankili Sugar Plant Ramdurg Sugar Complex Haliyal Sugar Complex Global Presence Projects

Having proven its credentials as a leading infrastructure conglomerate in India, GMR is expanding its operations globally. It now has presence in the following countries. Nepal Upper Karnali - Hydro Power Project (300 MW) Himtal - Hydro Power Project (250 MW)

41

United Kingdom InterGen - Energy Netherlands InterGen - Energy Philippines InterGen - Energy Australia InterGen - Energy Mexico InterGen - Energy Istanbul, Turkey Sabiha Gokcen International Airport - Airports Singapore Island Power

Company Information GMR Infrastructure Limited was originally incorporated on May 10, 1996 as a public limited company called Varalakshmi Vasavi Power Projects Limited in the State of Andhra Pradesh. On May 23, 1996 we received our certificate of commencement of business. On May 31, 1999 we changed our name to GMR Vasavi Infrastructure Finance Limited. On July 24, 2000 we changed our name to GMR Infrastructure Limited (GIL). On October 4, 2004 we shifted our registered office from the State of Andhra Pradesh to the State of Karnataka. The Company is an infrastructure holding company formed to fund the capital requirements of the GMR Groups initiatives in the infrastructure sector. GIL is engaged in development of various infrastructure projects in power and transportation sectors through several special purpose vehicles.

42

43

44

45

46

5.1.2 GMR INFRA MAY MONTH ANALYSIS GMR INFRA MAY EQUITY TABLE:Symb ol GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA Ser ies EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ Date Prev Close 113 116.6 119.3 5 115.2 5 116.1 5 117.1 111.9 115.9 5 111.3 112.4 113.4 137.3 152.9 5 158.4 5 170.2 5 168.6 5 164.9 157.4 5 163.7 162.4 Open Price 118 117.5 120.8 116.7 117 118.7 5 112.9 117 110.5 113.6 5 122.9 145 148 158 171 170 168 161.1 164 165 High Price 119 122.4 122.9 118.4 5 117.7 119.6 5 117 117.8 112.9 5 117.7 147 157.9 5 165.9 5 173 173.6 5 171.4 5 172.4 167.3 168 169.4 Low Price 115 115 113.35 114.15 112.1 111 110.55 110.15 105.6 112.25 122.9 121.65 142.35 158 161.15 162.3 155.25 161.1 160.85 162 Last Price 116.35 118.85 116.4 116.55 117.1 111.15 115.85 110.55 112.25 112.5 134.7 149.3 159.7 172.2 168.15 164.2 158.5 163.6 163.45 162.9 Close Price 116.6 119.3 5 115.2 5 116.1 5 117.1 111.9 115.9 5 111.3 112.4 113.4 137.3 152.9 5 158.4 5 170.2 5 168.6 5 164.9 157.4 5 163.7 162.4 164.5 5 Average Price 117.27 119.71 119.36 116.06 115.61 113.67 114.15 114.24 110.83 115.06 135.08 145.66 159.52 167.96 167.66 165.19 166.26 164.27 163.65 166.61 Total Traded Quantity 4966641 7553513 6326565 5089291 3900000 3316682 4161604 4696165 3605092 4462193 62439 21068986 11364457 18201627 11647961 5937486 12411987 10949461 10002596 12791895 Turnover in Lacs 5824.518409 9042.489716 7551.337826 5906.878162 4508.909404 3770.069377 4750.46704 5364.980309 3995.469767 5134.164822 84.340472 30689.75392 18129.00169 30570.93059 19528.54452 9808.248222 20636.71993 17987.06952 16368.87623 21312.62356

4-May09 5-May09 6-May09 7-May09 8-May09 11-May09 12-May09 13-May09 14-May09 15-May09 18-May09 19-May09 20-May09 21-May09 22-May09 25-May09 26-May09 27-May09 28-May09 29-May09

47

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts. Open Price=118 On 4th May 09 Low Price=110.15 On 13th May 09 High Price=173.65 On 22nd May 09 Close price=164.55 On 29th May 09

In the above graph I calculate Breakeven point for GMRINFRA Stock. Break Even Point(BEP) = (High Price + Low Price)/2 = (173.65+110.15)/2 = 141.5 Again I found margin of safety (MOS) (1) Margin of safety (mos) = opening share value BEP 48

=118-141.5 =-23.5 So here margin of safety is negative value. So here investor gets more Loss and shorts. Here investor can buy put options to get more profits. Investors should not go for call options at this point (2) Margin of safety (mos) =high share value BEP =173.65-141.5 =32.15 So here margin of safety is Positive value. So here investor gets more profits and longs. So at this point investor can sell their Call options to get more profis. (3) Margin of safety (mos) =LOW share value BEP =110.15-141.5 =-31.35 So here margin of safety is negative. so here investor gets more losses and more shorts. Investor can sell their Put Option at this point to incur more profits.

49

GMRINFRA MAY CALL OPTION TABLE(Strike price=135)

Instrument OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symbol GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA Opti on CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA Date 4-May-09 5-May-09 6-May-09 7-May-09 8-May-09 11-May-09 12-May-09 13-May-09 14-May-09 15-May-09 18-May-09 19-May-09 20-May-09 21-May-09 22-May-09 25-May-09 26-May-09 27-May-09 28-May-09 Expiry 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 Strike Price 135 135 135 135 135 135 135 135 135 135 135 135 135 135 135 135 135 135 135 Clos e 8.05 8.05 2 2 2 1 1 0.65 0.65 0.65 0.65 3 3 3 3 3 3 3 3 Settle Price 3.1 3.55 2 2.2 2.1 1 1.45 0.65 0.65 0.6 11.15 3 25.9 36.2 34.35 30.1 22.65 28.75 0 Turnover in Lacs 0 0 6.85 0 0 6.8 0 6.78 0 0 0 21.4 0 0 0 0 0 0 0

50

OBSERVATIONS AND FINDINGS MAY CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of GMRINFRA that is 1250 those who buy for 135 paid 3.1 Premium Per Share. Settlement Price is 163.75 Spot price 163.75 Strike price 135.00 Amount 28.75 Premium Paid (-) 3.1 Net Profit 25.65*1250=32062.5 Buyer Profit = Rs 32062.5(Net Amount) Because it is positive it is IN THE MONEY contract, hence buyer will get more profit, incase spot price increase buyer profit also increases.

SELLERS PAY OFF:

It is in the money for the buyer, so it is n out of the money for seller , hence his loss is also increases. Strike price 135.00 Spot price 163.75 Amount Premium Received Loss -28.75 3.1 -25.65*1250=-32062.5

Seller loss = Rs -32062.5(Loss) Because it is negative it is out of the money, hence seller will get more loss, incase spot price decreases in below strike price, seller get profit in premium level.

51

GMRINFRA MAY PUT OPTION TABLE(Strike price=135):Instrument OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symbol GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA Option PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA Date 4-May-09 5-May-09 6-May-09 7-May-09 8-May-09 11-May-09 12-May-09 13-May-09 14-May-09 15-May-09 18-May-09 19-May-09 20-May-09 21-May-09 22-May-09 25-May-09 26-May-09 27-May-09 28-May-09 Expiry 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 Strike Price 135 135 135 135 135 135 135 135 135 135 135 135 135 135 135 135 135 135 135 Settle Price 21.1 18.8 21.75 20.75 19.7 23.8 20.25 24.2 23.05 22 8.7 3.95 2.35 0.85 0.6 0.15 0.15 0 0

52

OBSERVATIONS AND FINDINGS MAY PUT OPTION

BUYERS PAY OFF: Those who have purchased put option at a strike price 135, the premium payable is 21.1. On the expiry date the spot market price enclosed at 155.95.
Strike Price 135 Spot price 155.95 Net Pay Off -20.95*1250=-26187.5 Already Premium paid is 21.1 So, he get loss up to Rs 26187.5 Because it is negative, out of the money contract, hence buyer gets more loss, incase spot price decrease in below strike price, buyer get profit in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if he is in profit and also seller has to get total profit. Spot Price 155.95 Strike Price 135 Net Pay off 20.95*1250=26187.5 Already Premium Received 21.1 So, he can get profit up to Rs 26187.5 Because it is positive, in the money Contract, hence seller gets more profit, incase Spot price decrease in below strike price seller can get loss in premium.

53

GMR(May Options) Strike Price=135

180 160 140 120 100 80 60 40 20 0

Price

Put Price Call Price Average GMR Price

Date

From the above graph You can see that there is a drastic increase in share price of GMRINFRA due to QIP issue $500 million on May 14th 09. So that is the reason share price of GMRINFRA has increased drastically. From the above news investors can buy call options to book profits in future. So in the above graph we can see that the GMRINFRA call prices has been increased from 14th may onwards .So its in the money for buyers who buy the call option. Its out of the money for the sellers of the call option. By above graph we can get that Put Price is reverse to the Spot price. If the Spot price increases then put prices get decreases and if the spot price decreases then put prices starts increasing, So these both are inversely proportional to each other.

54

GMRINFRA MAY FUTURE ANALYSIS:The Objective of this analysis is to evaluate the profit/loss position futures . This analysis is based on sample data taken of GMR INFRA scrip. This analysis considered the May Contract on GMRINFRA. The lot size of GMRINFRA is 1250,the time period in which this analysis done is from 4-05-2009 to 2805-2009.
Instru ment FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK Symbo l GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA Date 4-May09 5-May09 6-May09 7-May09 8-May09 11-May09 12-May09 13-May09 14-May09 15-May09 18-May09 19-May09 20-May09 21-May09 22-May09 25-May09 26-May09 27-May09 28-May09 Expiry 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 Ope n 114. 8 115. 6 119 116 116. 4 117. 5 112. 5 116. 25 108 113. 5 130 144 150. 55 160 171. 8 170. 7 165 162. 9 164. 05 Hig h 117 .45 122 122 .25 117 .5 117 118 .7 116 .5 117 .5 112 .9 117 .3 137 .9 156 165 .8 174 .1 174 172 172 .75 167 168 .4 Low 113. 9 115. 6 112. 2 113. 2 111. 1 110. 2 110. 2 110. 35 106. 7 112. 25 126. 2 121 149. 9 159 161. 7 162. 8 155. 25 162. 15 160. 95 Close 115.85 119 114.6 115.7 116.25 111.35 115.85 111 112.35 113.25 133.65 152.95 159.55 171.95 169.7 165.5 157.65 164.05 162.4 LTP 115.3 5 118.3 5 115.5 5 116.4 116.2 110.6 115.8 111.0 5 112.4 5 112.4 133.8 5 150 161.3 5 173.4 169.2 164.9 5 158.9 5 164.5 162.4 Settle Price 115.85 119 114.6 115.7 116.25 111.35 115.85 111 112.35 113.25 133.65 152.95 159.55 171.95 169.7 165.5 157.65 164.05 162.4 No. of contracts 1349 2680 2351 1331 1505 1129 1521 1614 1210 1281 56 5193 3652 7575 4733 2175 4685 2533 2779 Turnover in acs 7819.73 15975.69 13944.95 7675.46 8628.95 6389.69 8651.9 9199.92 6685.31 7353.81 372.71 37561.15 29226.09 64043.81 39911.74 18036.04 39076.79 20823.31 22805.69 Open Int 13775000 14290000 13865000 14410000 13980000 14010000 14605000 14660000 14835000 14650000 14590000 13130000 10380000 13000000 12290000 10775000 8760000 7075000 2320000

55

GMRINFRA(May Futures)
210 180 150 120 90 60 30 0 10-May-09 12-May-09 14-May-09 16-May-09 18-May-09 20-May-09 22-May-09 24-May-09 26-May-09 28-May-09 4-May-09 6-May-09 8-May-09

Price

Average GMR Price Future Price

Date

Future Market BUYER

12/05/09(buying) 28/05/09(Closing Period) 115.85 162.4 Profit = 46.55 Profit 46.55*1250=58187

SELLER
115.85 162.4 Loss = 46.55 Loss 46.55*1250=58187

Because buyer Future price will increase so, profit also increases. Seller Future price also increases so he can get loss. Incase seller Future will decreases, he can get profit. The closing Price of GMRINFRA at the end of contract period is 162.4 and this is considered as settlement price.

56

5.1.3 GMR INFRA JUNE MONTH ANALYSIS GMRINFRA JUNE EQUITY:Symbol Seri es EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ Date Prev Close 164.55 175.1 172.9 172.75 177.75 170.55 160.2 166.55 162.55 138 159.45 147.65 151.35 143.95 143.15 147.3 139.75 138.6 139.2 134.75 136.75 155.15 Open Price 167 178.9 176.9 172.1 180 174.9 159.8 169 163.4 157 155 145.1 151 145 145.05 149.9 135.1 140 140.35 137 138.15 155.9 High Price 176.4 180.85 177.35 179.9 183.5 174.9 170 172 145.36 163.2 157 153 154 146.8 148.9 151 142.7 142.3 141.5 139.55 157.25 157.25 Low Price 162.55 168.1 167.15 172 169.05 156.7 149.05 158 136 152.4 146 142.1 142.1 137.2 141.8 138.65 134.45 135.7 133.25 134.1 138.15 140.1 Last Price 175.2 172.2 171.95 178 170.45 157.75 167.35 162.9 137.45 158.8 148.05 150.6 143.95 143.85 147.95 139 138.25 139.15 135.45 137.35 154.35 141.35 Close Price 175.1 172.9 172.75 177.75 170.55 160.2 166.55 162.55 138 159.45 147.65 151.35 143.95 143.15 147.3 139.75 138.6 139.2 134.75 136.75 155.15 141.85 Average Price 171.15 173.62 173.15 177.94 177.04 165.28 161.3 165.35 147.29 158.88 150.89 149.6 148.91 142 146 144.75 139.05 139.45 136.88 137.11 151.77 145.57 Total Traded Quantity 19950076 15822276 11234059 16706677 17578054 16210921 19634278 12369000 14231441 23539810 13210538 11553437 10745434 11585108 8967831 11218177 14718034 11490518 13960618 9372467 43432666 23533314 Turnover in Lacs 34144.15905 27470.65369 19451.91789 29728.11388 31120.95275 26793.31401 31670.47058 20452.47894 22669.03497 37400.17848 19933.32656 17284.0867 16001.49497 16450.62817 13093.16327 16237.97072 20464.88749 16022.96305 19108.99344 12850.29593 65915.85738 34256.29143

GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA

1-Jun09 2-Jun09 3-Jun09 4-Jun09 5-Jun09 8-Jun09 9-Jun09 10-Jun09 11-Jun09 12-Jun09 15-Jun09 16-Jun09 17-Jun09 18-Jun09 19-Jun09 22-Jun09 23-Jun09 24-Jun09 25-Jun09 26-Jun09 29-Jun09 30-Jun09

57

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts. Open Price=167 On 1st June 09 Low Price=133.25 On 5th June 09 High Price=183.5 On 25th June 09 Close price=141 On 30th June 09

In the above graph I calculated Break Even point for GMRINFRA Stock for June Month. Break Even Point(BEP) = (High Price + Low Price)/2 = (183.5+133.25)/2 = 158.37 58

Again I found margin of safety (MOS) (1) Margin of safety (mos) = opening share value BEP =167-158 =9 So here margin of safety is Positive value. So here investor gets more profits and longs. Investor can buy call options to get more profits. Investors should not go for put options at this point (2) Margin of safety (mos) =high share price BEP =183-158 =25 So here margin of safety is Positive value. So here investor gets more profits and longs. So at this point investor can sell their Call options to get more profits. (3) Margin of safety (mos) =Low share value BEP =133.25-158 =-24.75 So here margin of safety is negative. So here investor gets more losses and shorts. Investor can sell their Put Option at this point to incur more profits.

59

GMRINFRA JUNE CALL OPTION TABLE(Strike Price=155) :Instrument OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symbol GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA Option CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA Date 1-Jun-09 2-Jun-09 3-Jun-09 4-Jun-09 5-Jun-09 8-Jun-09 9-Jun-09 10-Jun-09 11-Jun-09 12-Jun-09 15-Jun-09 16-Jun-09 17-Jun-09 18-Jun-09 19-Jun-09 22-Jun-09 23-Jun-09 24-Jun-09 25-Jun-09 Expiry 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 Strike Price 155 155 155 155 155 155 155 155 155 155 155 155 155 155 155 155 155 155 155 Settle Price 29.4 27.05 26.2 29.3 23.55 15.85 19.45 16.15 12.4 12.95 6.1 7.05 3.75 2.85 3.6 0.55 0.15 0.05 0

60

OBSERVATIONS AND FINDINGS JUNE CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of GMRINFRA that is 1250 those who buy for 155 paid 29.4 Premium Per Share. Taken Spot price on 11th june 09 is 138.Such as Call option is sold on 11th June Spot price 138.00 Strike price 155.00 Amount -17 Net Loss -17*1250=-21250 Buyer Loss = Rs 21250(Net Amount) Because it is negative it is OUT OF THE MONEY contract, hence buyer will get more Loss, incase spot price decreases buyer Loss also increases.

SELLERS PAY OFF:

It is OUT OF THE MONEY for the buyer, so it is IN THE MONEY for seller , hence his Profit increases. Strike price 155.00 Spot price 138.00 Amount 17

Profit 17*1250=21250 Seller Profit = Rs 21250(Profit) Because it is positive so it is IN THE MONEY, hence seller will get more profit, incase spot price increases in above strike price, seller get loss in premium level.

61

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

Instrument OPTSTK OPTSTK OPTSTK PTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK

Symbol GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA

Option PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA

Date 1-Jun-09 2-Jun-09 3-Jun-09 4-Jun-09 5-Jun-09 8-Jun-09 9-Jun-09 10-Jun-09 11-Jun-09 12-Jun-09 15-Jun-09 16-Jun-09 17-Jun-09 18-Jun-09 19-Jun-09 22-Jun-09 23-Jun-09 24-Jun-09 25-Jun-09

Expiry 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09

Strike Price 155 155 155 155 155 155 155 155 155 155 155 155 155 155 155 155 155 155 155

Settle Price 8.9 8.75 8.05 6.2 7.65 10.4 7.6 8.35 9.8 8.25 13.3 10.55 14.65 14.6 11.2 15.75 16.55 15.8 0

62

OBSERVATIONS AND FINDINGS JUNE PUT OPTION BUYERS PAY OFF: Those who have purchase put option at a strike price 135, the premium payable is 8.9. On the expiry date the spot market price enclosed at 155.95.
Strike Price Spot price Amount Premium Paid(-) Profit 155 139.2 15.8 8.9 6.9*1250=8625

So, he got profit up to Rs 8625 Because it is positive, IN THE MONEY contract, hence buyer gets profit, incase spot price increases above strike price, buyer get loss in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if buyer is in profit and also seller has to get total loss. Spot Price 139.2 Strike Price 155 Amount -15.8 Premium received (+) 8.9 Loss -6.9*1250=-8625 Already Premium Received So, he can get Loss up to Rs 8625 Because it is Loss, OUT OF THE MONEY Contract, hence seller gets more Loss , incase Spot price increases above strike price seller can get profit in premium.

63

GMRINFRA JUNE FUTURE ANALYSIS:-

The Objective of this analysis is to evaluate the profit/loss position futures . This analysis is based on sample data taken of GMR INFRA scrip. This analysis considered the May Contract on GMRINFRA. The lot size of GMRINFRA is 1250,the time period in which this analysis done is from 1-06-2009 to 25-06-09
Instru ment FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK Symbol GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA GMRINFRA Date 1-Jun09 2-Jun09 3-Jun09 4-Jun09 5-Jun09 8-Jun09 9-Jun09 10Jun-09 11Jun-09 12Jun-09 15Jun-09 16Jun-09 17Jun-09 18Jun-09 19Jun-09 22Jun-09 23Jun-09 24Jun-09 25Jun-09 Expiry 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 Op en 167 .8 177 .9 175 .3 171 .9 181 174 157 168 163 .1 159 157 .4 143 150 .7 143 145 148 .5 136 .9 140 .3 141 .3 Hig h 177 .4 178 .75 177 .75 10. 5 183 .65 174 168 .3 170 .75 164 .25 163 .65 157 .4 153 .35 154 .15 146 .45 148 .4 150 .55 142 .8 142 .7 141 .8 Lo w 162 168 .2 167 .3 171 .9 170 155 .1 148 .65 157 .15 155 .5 152 .15 145 .2 142 .25 140 .35 136 .65 141 .25 138 .8 135 .1 136 133 .4 Close 176.0 5 173.5 173.4 178.3 171.3 5 158.3 166.0 5 162.0 5 157.5 5 159.4 147.3 5 151.5 5 143.1 142.8 146.8 139.9 139.3 5 139.7 5 134.7 LTP 175.95 173.05 172.35 178.5 170.75 156 166.8 162.95 157.6 159.25 147.5 150.7 143.15 144 147.6 139.3 138.8 139.65 134.7 Settle Price 176.05 173.5 173.4 178.3 171.35 158.3 166.05 162.05 157.55 159.4 147.35 151.55 143.1 142.8 146.8 139.9 139.35 139.75 134.75 No. of contracts 9497 6734 5241 7396 6208 5362 7813 4651 4445 11438 5372 4175 4368 5375 4437 5283 5754 5100 3570 Turnover in lacs 81453.39 58547.98 45511.33 65900.83 55215.25 44171.44 62709.57 38265.41 35463.05 90979.06 40518.95 31211.01 32499.43 38053.13 32290.93 38225.04 40174.64 35670.08 24630.91 Open Int 23635000 22640000 22395000 22000000 22280000 21655000 25005000 25320000 26475000 30380000 29600000 29440000 28370000 25490000 23350000 19820000 16190000 10010000 3890000

64

GMR(June Futures)
200 180 160 140 120 100 80 60 40 20 0 1-Jun-09 3-Jun-09 5-Jun-09 7-Jun-09 9-Jun-09

Price

Average GMR Price Future Price

15-Jun-09

11-Jun-09

13-Jun-09

17-Jun-09

19-Jun-09

21-Jun-09

23-Jun-09

Date

Future Market BUYER

12/06/09(buying) 26/06/09(Closing Period) 159.4 134.7 Loss = 24.7 Loss 24.7*1250=30875

SELLER
159.4 134.7 Profit = 24.7 Profit 24.7*1250=30875

Because buyer Future price will decreases so, loss also increases. Seller Future price decreases so he can get profit. Incase seller Future will increases, he can get Loss. The closing Price of GMRINFRA at the end of contract period is 134.7 and this is considered as settlement price.

65

25-Jun-09

PUNJAB NATIONAL BANK

66

5.2 PUNJAB NATIONAL BANK

5.2.1 PROFILE
With over 38 million satisfied customers and 4668 offices, PNB has continued to retain its leadership position among the nationalized banks. The bank enjoys strong fundamentals, large franchise value and good brand image. Besides being ranked as one of India's top service brands, PNB has remained fully committed to its guiding principles of sound and prudent banking. Apart from offering banking products, the bank has also entered the credit card & debit card business; bullion business; life and non-life insurance business; Gold coins & asset management business, etc. Since its humble beginning in 1895 with the distinction of being the first Indian bank to have been started with Indian capital, PNB has achieved significant growth in business which at the end of March 2009 amounted to Rs 3,64,463 crore. Today, with assets of more than Rs 2,46,900 crore, PNB is ranked as the 3rd largest bank in the country (after SBI and ICICI Bank) and has the 2nd largest network of branches (4668 including 238 extension counters and 3 overseas offices).During the FY 2008-09, with 39% share of low cost deposits, the bank achieved a net profit of Rs 3,091 crore, maintaining its number ONE position amongst nationalized banks. Bank has a strong capital base with capital adequacy ratio as per Basel II at 14.03% with Tier I and Tier II capital ratio at 8.98% and 5.05% respectively as on March09. As on March09, the Bank has the Gross and Net NPA ratio of only 1.77% and 0.17% respectively. During the FY 2008-09, its ratio of priority sector credit to adjusted net bank credit at 41.53% & agriculture credit to adjusted net bank credit at 19.72% was also higher than the respective national goals of 40% & 18%. PNB has always looked at technology as a key facilitator to provide better customer service and ensured that its IT strategy follows the Business strategy so as to arrive at Best Fit. The bank has made rapid strides in this direction. Alongwith the achievement of 100% branch computerization, one of the major achievements of the Bank is covering all the branches of the Bank under Core Banking Solution (CBS), thus covering 100% of its business and providing Anytime Anywhere banking facility to all customers including customers of more than 2000 rural branches. The bank has also been offering Internet banking services to the customers of CBS branches like booking of tickets, payment of bills of utilities, purchase of airline tickets etc Towards developing a cost effective alternative channels of delivery, the bank with more than 2150 ATMs has the largest ATM network amongst Nationalized Banks. With the help of advanced technology, the Bank has been a frontrunner in the industry so far as the initiatives for Financial Inclusion is concerned. With its policy of inclusive growth in the Indo-Gangetic belt, the Banks mission is Banking for Unbanked. The Bank has launched a drive for biometric smart card based technology enabled Financial Inclusion with the help of Business Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile customer. The BC/BF will address the outreach issue while technology will provide cost effective and transparent services.

67

The Bank has started several innovative initiatives for marginal groups like rickshaw pullers, vegetable vendors, diary farmers, construction workers, etc. The Bank has already achieved 100% financial inclusion in 21,408 villages. Backed by strong domestic performance, the bank is planning to realize its global aspirations. In order to increase its international presence, the Bank continues its selective foray in international markets with presence in Hongkong, Dubai, Kazakhstan, UK, Shanghai, Singapore, Kabul and Norway. A second branch in Hongkong at Kowloon was opened in the first week of April09. Bank is also in the process of establishing its presence in China, Bhutan, DIFC Dubai, Canada and Singapore. The bank also has a joint venture with Everest Bank Ltd. (EBL), Nepal. Under the long term vision, Bank proposes to start its operation in Fiji Island, Australia and Indonesia. Bank continues with its goal to become a household brand with global expertise. Amongst Top 1000 Banks in the World, The Banker listed PNB at 250th place. Further, PNB is at the 1166th position among 48 Indian firms making it to a list of the worlds biggest companies compiled by the US magazine Forbes.

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

Parameters Operating Profit* Net Profit* Deposit Advance Total Business

Mar'07 Mar'08 3617 1540 4006 2049

Mar'09 5744 3091 209760 154703 364463

CRAR 26.02 41.67 22.47 26.55 24.15

139860 166457 96597 119502 236456 285959

68

69

70

71

72

73

74

5.2.2 PNB MAY MONTH ANALYSIS

PNB MAY EQUITY TABLE:Sym bol PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB Serie s EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ Date Prev Close 477.9 503.3 503.8 5 506.1 524.7 5 528.7 5 522.1 5 550.1 562.7 5 562.2 5 574.7 5 662.8 689.4 676.6 5 668.7 5 663.1 5 658.7 642.8 5 639.6 5 664.3 Open Price 494.4 509.9 506 510 520.2 526.2 522.1 5 550.3 555 565 620 700 689 689 670 671.5 625.7 643 661 670.1 High Price 506.5 520 519.8 530 532 534.7 553.5 574.5 571.5 5 589 680 725 708.5 697 683 671.5 668.9 669 666 676 Low Price 485. 55 492. 4 503. 65 508. 35 512. 1 512 515. 1 545. 35 540. 55 561. 6 620 665 666. 15 663. 1 645. 6 637. 8 625. 7 635 650 662 Last Price 504 502. 5 506. 55 529. 3 528 521 550. 45 565 563 577 665 695 679 665 659. 85 643. 05 668. 1 636 657 670. 1 Close Price 503.3 503.8 5 506.1 524.7 5 528.7 5 522.1 5 550.1 562.7 5 562.2 5 574.7 5 662.8 689.4 676.6 5 668.7 5 663.1 5 642.8 5 664.3 639.6 5 658.7 670.8 Averag e Price 497.77 506.74 510.51 520.17 522.01 522.44 539.31 562.07 563 572.53 651.83 694.14 689.33 685.57 665.84 647.54 661.5 649.99 659.28 669.64 Total Traded Quantity 2609220 1981817 1732069 1153700 1181648 1209101 2309184 2296752 2503026 2465576 33068 3124143 1865804 1894595 1137015 1350731 597170 679608 745123 690021 Turnover in Lacs 12987.88804 10042.75586 8842.385504 6001.256074 6168.310954 6316.875369 12453.74827 12909.26984 14092.03063 14116.18189 215.548411 21685.98096 12861.63709 12988.77185 7570.647807 8746.542945 3950.253605 4417.400963 4912.4816 4620.679415

4-May09 5-May09 6-May09 7-May09 8-May09 11May-09 12May-09 13May-09 14May-09 15May-09 18May-09 19May-09 20May-09 21May-09 22May-09 25May-09 26May-09 27May-09 28May-09 29May-09

75

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts. Open Price=494 On 4th May 09 Low Price=485 On 4th May 09 High Price=725 On 19nd May 09 Close price=670 On 29th May 09

In the above graph I calculate Breakeven point for GMRINFRA Stock. Break Even Point(BEP) = (High Price + Low Price)/2 = (725+485)/2 = 605 Again I found margin of safety (MOS) (1) Margin of safety (mos) = opening share value BEP =494-605 76

=-111 So here margin of safety is negative value. So here investor gets more Loss and shorts. Here investor can buy put options to get more profits. Investors should not go for call options at this point (2) Margin of safety (mos) =high share value BEP =725-605 =120 So here margin of safety is Positive value. So here investor gets more profits and longs. So at this point investor can sell their Call options to get more profis. (3) Margin of safety (mos) =LOW share value BEP =485-605 =-120 So here margin of safety is negative. so here investor gets more losses and more shorts. Investor can sell their Put Option at this point to incur more profits.

77

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

78

OBSERVATIONS AND FINDINGS MAY CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of PNB that is 300 those who buy for 580 paid 19.15 Premium Per Share. Settlement Price is 639.65 Spot price 639.65 Strike price 580.00 Amount 59.65 Premium Paid (-) 19.15 Net Profit 40.5*300=12150 Buyer Profit = Rs 12150(Net Amount) Because it is positive it is IN THE MONEY contract, hence buyer will get more profit, incase spot price increase buyer profit also increases.

SELLERS PAY OFF:

It is in the money for the buyer, so it is n out of the money for seller , hence his loss is also increases. Strike price 580.00 Spot price 639.65 Amount Premium Received Loss -59.65 19.15 -40.5*300=-12150

Seller loss = Rs -12150(Loss) Because it is negative it is out of the money, hence seller will get more loss, incase spot price decreases in below strike price, seller get profit in premium level. 79

PNB MAY PUT OPTION TABLE(Strike Price=580):Instrument OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symbol PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB Option PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA Date 4-May-09 5-May-09 6-May-09 7-May-09 8-May-09 11-May-09 12-May-09 13-May-09 14-May-09 15-May-09 18-May-09 19-May-09 20-May-09 21-May-09 22-May-09 25-May-09 26-May-09 27-May-09 28-May-09 Expiry 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 Strike Price 580 580 580 580 580 580 580 580 580 580 580 580 580 580 580 580 580 580 580 Close 84.9 84.9 84.9 84.9 84.9 84.9 84.9 84.9 84.9 84.9 84.9 84.9 84.9 84.9 84.9 84.9 84.9 84.9 84.9 Settle 94.1 Price 91.75 88.55 74.6 70.05 71.2 52.75 43.7 41.85 33.55 11.3 5.5 5.35 4.65 3.75 2 0.9 0.05 0

80

OBSERVATIONS AND FINDINGS MAY PUT OPTION

BUYERS PAY OFF: Those who have purchase put option at a strike price 580, the premium payable is 94.1 On 18th May 09 the spot price enclosed is 662.8 .here this put option sold on 18th may
09. Strike Price 580 Spot price 662.8 Net Pay Off -82.8*300=-24840 Already Premium paid is 94.1 So, he get loss up to Rs 24840 Because it is negative, out of the money contract, hence buyer gets more loss, incase spot price decrease in below strike price, buyer get profit in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if he is in profit and also seller has to get total profit. Spot Price 662.8 Strike Price 580 Net Pay off 82.8*300=24840 Already Premium Received 94.1 So, he can get profit up to Rs 24840 Because it is positive, in the money Contract, hence seller gets more profit, incase Spot price decrease in below strike price seller can get loss in premium.

81

PNB(May Options) strike Price=580

750 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0

SSS

Price

Average PNB Price CALL price Put price

Date

Punjab national bank minting money On 12th may 09 so its volumes are increasing. On 12th may 09 Punjab touched an intraday high of Rs 549.50 and an intraday low of Rs 508.40. At 1:45 pm, the share was quoting at Rs 547.20, up Rs 28.10, or 5.41%. So from may 12th Onwards there is a drastic increase in Share price of PNB. So that the call option values also starts increasing and put option values decreased from 12th may onwards. On 12th May there is drastic increase in total turnover in lacs from 6316.87 on 11th May 09 to 12456.74 on 12th May 09. Traded quantity increased from 12,09,101 on may 11th 09 to 23,09,184 on 12th may 09. So the share price of PNB started increasing from 12th may 09. On 20th may 09 PNB announced it will disinvest 26% stake in PNB Housing Finance to Dawnay Day. So the share price decreased from 20th may onwards. Then call option values started decreasing, put options values started increasing.

82

PNB MAY FUTURES:Instr ume nt FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK Sym bol PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB Date Expiry Ope n 484. 9 499 503. 3 509. 85 523. 8 525. 5 515. 8 548 543 558. 1 658. 9 719. 7 680 680 655. 25 664 648 648 661 High Low Close LTP Settle Price 498.85 499.75 502.75 519.85 523.2 515.45 547.25 554.75 556.7 572.95 682.5 689.3 680.5 668.4 663.1 644.05 634.4 661.5 664.3 No. of contrac ts 2947 3119 3276 2423 3050 2597 3899 3816 3215 3595 38 4601 2683 3335 3158 3350 2059 1941 1999 Turnover in lacs 8725.53 9415.69 9949.45 7491.64 9465.21 8045.32 12452.47 12752.89 10710.8 12325.3 154.26 19195.66 11095.09 13711.66 12590.17 13020.47 8012.99 7661.76 7934.09 Open Int

4-May09 5-May09 6-May09 7-May09 8-May09 11May-09 12May-09 13May-09 14May-09 15May-09 18May-09 19May-09 20May-09 21May-09 22May-09 25May-09 26May-09 27May-09 28May-09

28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09

502.9 518 514.4 5 523 527.4 5 528.6 549.9 5 568.8 563.8 582.9 687 747 710 698 680.7 666 659.5 664 668.4

481. 5 489. 3 498 507. 25 506. 5 505. 4 512. 2 542 536 555. 2 658. 9 674 670. 2 663. 2 647. 25 638. 15 630 645. 3 653. 6

498.8 5 499.7 5 502.7 5 519.8 5 523.2 515.4 5 547.2 5 554.7 5 556.7 572.9 5 682.5 689.3 680.5 668.4 663.1 644.0 5 634.4 661.5

497. 15 500 504. 7 522. 25 525 516. 4 547. 3 551. 05 556. 5 575. 7 685. 05 686. 2 683. 1 663. 2 660. 8 642. 1 633. 25 660

1602000 1594800 1744200 1746000 1978800 2088600 2382600 2509800 2779200 2811000 2803800 2431800 2452200 2196600 1813200 1587000 1307400 1109400 663000

664.5 664. 5

83

PNB(May FUTURES) Strike Price=580

800 700 600 500 400 300 200 100 0

Price

Average PNB Price Future Price

Date

Future Market BUYER

12/05/09(buying) 28/05/09(Closing Period) 547.25 664.5 Profit = 117.25 Profit 145.2*300=35175

SELLER
547.25 664.5 Loss =117.25 Loss 117.25*300=35175

Because buyer Future price will increase so, profit also increases.Seller Future price also increases so he can get loss. Incase seller Future will decreases, he can get profit. The closing Price of PNB at the end of contract period is 664.5 and this is considered as settlement price.

84

5.2.3 PNB JUNE MONTH ANALYSIS PNB JUNE EQUITY TABLE:Symbo l PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB Serie s EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ Date 1-Jun-09 2-Jun-09 3-Jun-09 4-Jun-09 5-Jun-09 8-Jun-09 9-Jun-09 10-Jun-09 11-Jun-09 12-Jun-09 15-Jun-09 16-Jun-09 17-Jun-09 18-Jun-09 19-Jun-09 22-Jun-09 23-Jun-09 24-Jun-09 25-Jun-09 26-Jun-09 29-Jun-09 30-Jun-09 Prev Close 670.8 663.5 646.3 657.2 661.65 654.25 606.45 615.1 636 612.65 593 611.4 630.85 600 617.2 642.05 648.7 625.15 623.7 631.45 655.2 680.05 Open Price 684.4 674 650.1 649.8 666 650 601.05 612 638 614 583 605 634.85 618.7 639.7 646.85 635 628 640 633.15 655.55 683 High Price 684.4 674.4 664.45 665 670 659.85 624.9 638.5 638 632 617.9 634.85 647 640 645.85 659.8 647 631.8 647.7 667 689.9 694 Low Price 658.55 633.3 641 623.35 648.3 595.35 590.1 612 606 590.2 583 598.2 605 612 624.05 645 620.3 620.1 626 620.7 655 673.5 Last Price 667 648.3 658 660.9 652.05 598 615.1 632.1 614 592.9 613.95 629.8 612 619 645 645 621 623 631 649 676.95 679 Close Price 663.5 646.3 657.2 661.65 654.25 606.45 610.85 636 612.65 593 611.4 630.85 600 617.2 642.05 648.7 625.15 623.7 631.45 655.2 680.05 677.75 Average Price 668.62 648.03 651.67 647.62 661 618.81 612.97 628.5 615.23 602.32 606.93 625.96 633.88 627.16 634.12 652.44 630.16 626.18 633.5 646.17 675.28 684.69

85

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts. Open Price=684 On 1st June 09 Low Price=583 On 15th June 09 High Price= 694 On 30th June 09 Close price=677 On 30th June 09

In the above graph I calculated Break Even point for GMRINFRA Stock for June Month. Break Even Point(BEP) = (High Price + Low Price)/2 = (694+583)/2 = 638

86

Again I found margin of safety (MOS) (1) Margin of safety (mos) = opening share value BEP =684-638 =46 So here margin of safety is Positive value. So here investor gets more profits and longs. (2) Margin of safety (mos) =high share price BEP =694-638 =56 So here margin of safety is Positive value. So here investor gets more profits and longs. So at this point investor can sell their Call options to get more profits. (3) Margin of safety (mos) =Low share value BEP =583-638 =-55 So here margin of safety is negative. So here investor gets more losses and shorts. Investor can sell their Put Option at this point to incur more profits.

87

PNB JUNE PUT OPTION(Strike Price=640):Instrument OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symbol PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB Option PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA Date 1-Jun-09 2-Jun-09 3-Jun-09 4-Jun-09 5-Jun-09 8-Jun-09 9-Jun-09 10-Jun-09 11-Jun-09 12-Jun-09 15-Jun-09 16-Jun-09 17-Jun-09 18-Jun-09 19-Jun-09 22-Jun-09 23-Jun-09 24-Jun-09 25-Jun-09 Expiry 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 Strike Price 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 Settle Price 37.85 43.1 36.4 33.7 34.45 58.95 54.1 41.05 50.25 61.4 45.5 32.6 39.95 36.25 21.1 11.4 21.15 19 0

88

OBSERVATIONS AND FINDINGS JUNE PUT OPTION BUYERS PAY OFF: Those who have purchase put option at a strike price 640, the premium payable is 37.85. On 17th spot market price enclosed at 636
Strike Price 640.00 Spot price 600.05 Amount 39.95 Premium Paid(-) 37.85 Profit 2.1*300=630 So, he got profit up to Rs 630 Because it is positive, IN THE MONEY contract, hence buyer gets profit, incase spot price increases above strike price, buyer get loss in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if buyer is in profit and also seller has to get total loss. Spot Price 600.05 Strike Price 640.00 Amount -39.95 Premium received (+) 37.85 Loss -2.1*300=--630 Already Premium Received So, he can get Loss up to Rs 630 Because it is Loss, OUT OF THE MONEY Contract, hence seller gets more Loss , incase Spot price increases above strike price seller can get profit in premium.

89

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

90

OBSERVATIONS AND FINDINGS JUNE CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of PNB that is 300 those who buy for 640 paid 51 Premium Per Share. Taken Spot price on 9th june 09 is 615.1.Such as Call option is sold on 9th June Spot price 615.1 Strike price 640.0 Amount -24.9 Net Loss -24.9*300=-7470 Buyer Loss = Rs 7470(Net Amount) Because it is negative it is OUT OF THE MONEY contract, hence buyer will get more Loss, incase spot price decreases buyer Loss also increases.

SELLERS PAY OFF:

It is OUT OF THE MONEY for the buyer, so it is IN THE MONEY for seller , hence his Profit increases. Strike price 640.00 Spot price 615.1 Amount 24.9

Profit 24.9*300=7470 Seller Profit = Rs 7470(Profit) Because it is positive so it is IN THE MONEY, hence seller will get more profit, incase spot price increases in above strike price, seller get loss in premium level.

91

PNB June Options(strike Price=640)

800 700 600 500 400 300 200 100 0 1-Jun-09 3-Jun-09 5-Jun-09 7-Jun-09 9-Jun-09

Stock Price

Underlying Price call Price Put Price

13-Jun-09

11-Jun-09

15-Jun-09

17-Jun-09

19-Jun-09

21-Jun-09

Date

PNB declines 6.7% On June 8th 09, PNB touched an intraday high of Rs 662 and an intraday low of Rs 608.15. At 2:59 pm, the share was quoting at Rs 609.05, down Rs 43.65, or 6.69%. It was trading with volumes of 124,992 shares. On 6th June the share closed down 0.90% or Rs 5.90 at Rs 652.70. so that put option started increasing and call option tend to decrease from 6th June 09 onwards. PNB was the top gainer at the Nifty on June 18th 09 so it touched an intraday high of Rs 639 and an intraday low of Rs 612. The share was quoting at Rs 638.35, up Rs 23.50, or 3.82%. So that the share value increased on June 18th 09 hence call price also rise and put option prices tend to decrease. PNB Minting money on 15th June 09 so it touched an intraday high of Rs 617.90 and an intraday low of Rs 583. At 2:22 p.m the share was quoting at Rs 613.50, up Rs 20.50, or 3.46%. It was trading with volumes of 635,040 shares. On 11th June the share closed down 3.21% or Rs 19.65 at Rs 593.

92

23-Jun-09

PNB JUNE FUTURES:Instrument FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK Symbol PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB Date 1-Jun-09 2-Jun-09 3-Jun-09 4-Jun-09 5-Jun-09 8-Jun-09 9-Jun-09 10-Jun-09 11-Jun-09 12-Jun-09 15-Jun-09 16-Jun-09 17-Jun-09 18-Jun-09 19-Jun-09 22-Jun-09 23-Jun-09 24-Jun-09 25-Jun-09 Expiry 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 Open 660 650.95 632.6 630 659.95 651.4 595 623.6 634 613.3 589.2 602 632 608 624 650.95 633.55 627.1 630.35 High 663 653 638.8 657.95 664.8 652.1 624.75 638.75 636.85 619.4 616.25 633 643.5 635.75 647.45 659 647 631.85 643 Low 641.15 609.85 618 625.15 649.35 595 588.5 621 602.55 590.05 582.6 602 603.1 608 621.4 643 619.1 621 626.6 Close 646.6 625.65 632.05 655.3 654.15 605.8 613.2 633.5 612 593.6 610.1 630.25 607.95 616.85 643.65 646.6 626.75 625.35 631.75 LTP 650.7 629 630.7 653.5 653.35 595 618.8 634.85 610.1 594.4 614 627.85 606 619 646.4 643.5 622 626.25 631.75 Settle Price 646.6 625.65 632.05 655.3 654.15 605.8 613.2 633.5 612 593.6 610.1 630.25 607.95 616.85 643.65 646.6 626.75 625.35 631.45

93

PNB(June Futures)
680 S t o c k 660 640 620 600 580 Underlying Price Future Price

P 560 r i 540 c e Date

Future Market BUYER

12/06/09(buying) 25/06/09(Closing Period) 593.6 631.45 Profit = 37.85 Profit 37.05*300=11355

SELLER
593.6 631.45 Loss = 37.25 Loss 37.25*300=11355

Because buyer Future price will increase so, profit also increases. Seller Future price also increases so he can get loss. Incase seller Future will decreases, he can get profit. The closing Price of PNB at the end of contract period is 630.35 and this is considered as settlement price.

94

HINDUSTAN UNILEVER

95

5.3 Hindustan Unilever:5.3.1 Introduction Hindustan Unilever Limited (HUL) is India's largest fast moving consumer goods company, with leadership in Home & Personal Care Products and Foods & Beverages. HUL's brands, spread across 20 distinct consumer categories, touch the lives of two out of three Indians. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of Rs.13,718 crores. The mission that inspires HUL's over 15,000 employees is to "add vitality to life". With 35 Power Brands, HUL meets everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life. It is a mission HUL shares with its parent company, Unilever, which holds 52.10% of the equity. A Fortune 500 transnational, Unilever sells Foods and Home and Personal Care brands in about 100 countries worldwide.

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

Lux Lifebuoy Liril Hamam

Breeze Dove Pears Rexona

Surf Excel Rin Wheel Sunlight

Fair & Lovely Pond's Vaseline Aviance

Sunsilk Naturals Clinic

Pepsodent Closeup

96

Axe Rexona

Lakme

Ayush

Brooke Bond Lipton

Brooke Bond Bru

Kissan Annapurna Knorr

Kwality Wall's

97

98

Merging company Kothari General Foods Corporation Ltd.

Merged with

Appointed Effective Date of date date allotment

Share ratio

Value of fraction (Rs.) 7.00

Brooke Bond India Ltd.

1-Jan-92

1-Jan-92 30-Jun-92 21:1 24-Aug93 24-Aug93

Tea Estates India Brooke Bond Ltd. India Ltd. Doom Dooma India Ltd. Kissan Products Ltd. Brooke Bond India Ltd. Brooke Bond India Ltd.

1-Jan-93 1-Jan-93 1-Apr-93

1-Jun-93 1-Jun-93 20-Jan94

10:12 10:11

35.25 35.25 Not applicable

22-Jan-94 1:100

Lipton India Ltd. Brooke Bond India Ltd. [name changed to 1-Jul-93 Brooke Bond Lipton India Ltd. (BBLIL)] The Tata Oil Mills Company Ltd. BBLIL Pond's (India) Ltd. Industrial Perfumes Ltd. International Bestfoods Ltd. Aviance Limited Hindustan Lever Ltd. Hindustan Lever Ltd. Hindustan Lever Ltd. Hindustan Lever Ltd. Hindustan Lever Ltd. Hindustan Lever Ltd. 1-Apr-93

9-Mar94

16-May94

10:9

48.99

28-Dec94

5-Apr-95 15:2

38.86

1-Jan-96 1-Jan-98 1-Jan-99 1-Jun-01 1-Jun-01

21-Mar- 16-May97 97 15-Oct98 3-Mar-99

20:9 4:3

52.82 525.00 Not applicable 73.84

9-Feb-00 23-Feb-00 5:2 26-Sep01 25-Sep01 20-Oct-01 3:2*

Not Not Not Applicable Applicable Applicable

Tea Estates India Ltd. (Formerly Demerger from known Hindustan Lever asThiashola Tea Limited Company Limited) (TEI) Doom Dooma Demerger from

1-Apr-05

1-Dec-05 02-Dec-05 ^

Not Applicable

1-Apr-05 99

1-Dec-05 02-Dec-05 ^^

Not

Tea Company Hindustan Lever Ltd (Formerly Limited known as Daverashola Tea Company Limited) (DDT) Lever India Exports Limited Lipton India Exports Limited Merryweather Food Products Limited TOC Disinfectants Limited Hindustan Lever Ltd. Hindustan Lever Limited Hindustan Lever Limited Hindustan Lever Limited 1-Apr-05 1-Jan-05 30-Dec05 30-Dec05 30-Dec05 30-Dec05 30-Dec05 28-Feb06

Applicable

Not Not Not Applicable Applicable Applicable Not Not Not Applicable Applicable Applicable Not Not Not Applicable Applicable Applicable Not Applicable Not Applicable 28.00

1-Jan-05

1-Apr-05

26-Apr-06 500:1 **

International Hindustan Lever Fisheries Limited Limited Vashisti Detergents Limited Hindustan Lever Limited

1-Jan-05

26-Apr-06 1:1***

1-Jul-05

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

Modern Food Industries (India) Limited & Hindustan Lever Modern Food and Limited Nutrition Industries Limited Shamnagar Estates Private Limited, Jamnagar Properties Private Limited and Hindustan Kwality Walls Foods Private Limited (now known as Daverashola Estates Private Limited)

1-Oct-06

30-Mar- Not Not Not 07 Applicable Applicable Applicable

Demerger of certain Units from Hindustan Lever Limited

1-Nov-06

29-Mar- Not Not Not 07 Applicable Applicable Applicable

100

Notes : *Swap based on Rs. 10 share of International Bestfoods Ltd. for Re. 1 share of Hindustan Lever. ** Swap based on Rs.5/- share of TOC Disinfectants Limited (TOC) for Re.1/- share of Hindustan Lever Limited *** Swap based on Rs.100/- share of International Fisheries Limited (IFL) for Re.1/- share of Hindustan Lever Limited **** Swap based on Rs.10/- share of Vashisti Detergents Limited (VDL) for Re.1/- share of Hindustan Lever Limited ^ 49,50,000 Equity Shares of Rs.10/- each and 10,00,000 Preference Shares of Rs.100/- each were allotted to HLL pursuant to the demerger by TEI ^^ 4,88,000 Equity Shares of Rs.100/- each and 10,00,000 Preference Shares of Rs.100/- each were allotted to HLL pursuant to the demerger by DDT

101

5.3.2 HUL MAY MONTH ANALYSIS Hindustan Unilever May Equity Table:-

Symbol HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR

Seri es EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ

Date 4-May09 5-May09 6-May09 7-May09 8-May09 11-May09 12-May09 13-May09 14-May09 15-May09 18-May09 19-May09 20-May09 21-May09 22-May09 25-May09 26-May09 27-May09 28-May09 29-May09

Prev Close 234.7 5 239.9 238.3 5 234.6 230.6 5 233.0 5 227.1 5 225.1 220.8 224.8 5 224.3 239.6 229.5 233.4 5 230.4 232 233.0 5 231 230.1 5 231

Open Price 236 240 239.9 234.5 230.7 5 235.2 5 227.6 225.1 222 226 244.9 5 245 234.9 233.2 231 231 238.7 233.3 232 232

High Price 242 241.5 240.8 5 238 234.1 5 236.5 227.8 5 227.2 225.6 5 227.4 264.4 251 235.8 5 235 234.3 235.5 238.7 233.3 233.5 233.9

Low Price 233.1 235.5 232.2 229.3 5 230 226 221.8 221.1 218.1 223.6 5 228 224 225 226.5 5 228.1 229.9 229.5 228.1 228.5 229.5 5

Last Price 239.6 237.2 233.5 230.3 233.5 226.2 225.2 220.8 225 224.5 5 239 230 232.9 5 230.0 5 232.8 231.7 231.4 5 230 230.8 231.5

Close Price 239.9 238.3 5 234.6 230.6 5 233.0 5 227.1 5 225.1 221.9 5 224.8 5 224.3 239.6 229.5 233.4 5 230.4 232 233.0 5 231 230.1 5 231 230.8

Averag e Price 237.38 238.94 234.99 233.23 233.15 228.22 223.99 223.58 220.91 224.83 247.92 228.66 228.92 229.92 231.58 233.36 233.77 229.72 231.19 230.91

Total Traded Quantity 4896016 2813418 5167053 5075534 5443176 7025750 8210288 3149690 7493434 2449088 51515 13669545 10140045 2715676 2391122 3418801 3475193 3314721 5375654 4633440

Turnover in Lacs 11622.20462 6722.363085 12141.97328 11837.50389 12691.00179 16034.23965 18390.49832 7042.135618 16553.85609 5506.23301 127.7145265 31256.89658 23212.54873 6243.855165 5537.462276 7978.185038 8123.976091 7614.612061 12428.16871 10699.28036

102

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts. Open Price=236 On 4th May 09 Low Price=218 On 14th May 09 High Price=264 On 18th May 09 Close price=1230 On 29th May 09

In the above graph I calculate Breakeven point for HUL Stock. Break Even Point(BEP) = (High Price + Low Price)/2 = (264+218)/2 = 241 Again I found margin of safety (MOS) (1) Margin of safety (mos) = opening share value BEP =236-241 103

=-5 So here margin of safety is negative value. So here investor gets more Loss and shorts. Here investor can buy put options to get more profits. Investors should not go for call options at this point (2) Margin of safety (mos) =high share value BEP =264-241 =23 So here margin of safety is Positive value. So here investor gets more profits and longs. So at this point investor can sell their Call options to get more profis. (3) Margin of safety (mos) =LOW share value BEP =218-241 =-23 So here margin of safety is negative. so here investor gets more losses and more shorts. Investor can sell their Put Option at this point to incur more profits.

104

HUL MAY MONTH CALL OPTION TABLE(Strike Price=230):Instrument OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symbol HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR Option CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA Date 4-May-09 5-May-09 6-May-09 7-May-09 8-May-09 11-May-09 12-May-09 13-May-09 14-May-09 15-May-09 18-May-09 19-May-09 20-May-09 21-May-09 22-May-09 25-May-09 26-May-09 27-May-09 28-May-09 Expiry 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 Strike Price 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 Close 14.05 14.5 12.95 9.3 10 6.8 6.05 4.85 5.75 5.3 8.55 6.95 8 6.15 5.95 5.85 3.25 2.55 0.8 Settle Price 14.05 14.5 12.95 9.3 10 6.8 6.05 4.85 5.75 5.3 8.55 6.95 8 6.15 5.95 5.85 3.25 2.55 0 Turnover in Lacs 87.32 19.62 4.85 95.84 62.45 218.24 393.6 315.39 500.32 289.54 7.22 428.93 395.65 355.92 332.6 188.92 218.34 230.15 383.37

105

OBSERVATIONS AND FINDINGS MAY CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of HUL that is 1000 those who buy for 230 paid 14.03 Premium Per Share. Spot price taken on 13th may 09 is 220.8, such as call option sold on 13th may 09. Spot price 220.8 Strike price 230.00 Amount -9.2 Net Loss -9.2*1000=-9200 Buyer Loss = Rs 11500(Net Amount) Because it is negative it is OUT OF THE MONEY contract, hence buyer will get more Loss, incase spot price decreases buyer Loss also increases.

SELLERS PAY OFF:

It is OUT OF THE MONEY for the buyer, so it is IN THE MONEY for seller , hence his Profit increases. Strike price 220.8 Spot price 230.00 Amount 9.2

Profit 9.2*1000=9200 Seller Profit = Rs 9200(Profit) Because it is positive so it is IN THE MONEY, hence seller will get more profit, incase spot price increases in above strike price, seller get loss in premium level.

106

HUL MAY MONTH PUT OPTION TABLE(Strike Price=230):Instrument OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symbol HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR Option PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA Date 4-May-09 5-May-09 6-May-09 7-May-09 8-May-09 11-May-09 12-May-09 13-May-09 14-May-09 15-May-09 18-May-09 19-May-09 20-May-09 21-May-09 22-May-09 25-May-09 26-May-09 27-May-09 28-May-09 Expiry 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 28-May-09 Strike Price 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 Close 4.9 5.05 6.15 7.75 6.4 9.85 10.35 12.45 9.95 10.3 10.3 6.25 4.65 5.85 3.95 2.65 3.15 1.9 0.1 Settle Price 4.9 5.05 6.15 7.75 6.4 9.85 10.35 12.45 9.95 10.3 3.45 6.25 4.65 5.85 3.95 2.65 3.15 1.9 0 Turnover in Lacs 98.76 108.01 108.6 189.21 35.45 105.18 52.99 41 21.89 57.45 0 42.65 65.84 37.72 86.76 74.5 97.53 78.98 115.41 Open Int 60000 88000 99000 118000 126000 115000 114000 106000 108000 99000 99000 97000 94000 92000 96000 94000 90000 100000 110000

107

OBSERVATIONS AND FINDINGS MAY PUT OPTION BUYERS PAY OFF: Those who have purchase put option at a strike price 230, the premium payable is 8.9. On 12th may the spot market price enclosed at .
Strike Price Spot price Amount Premium Paid(-) Profit 230 215.65 -14.35 8.9 5.45*1000=5450

So, he got profit up to Rs 5450 Because it is positive, IN THE MONEY contract, hence buyer gets profit, incase spot price increases above strike price, buyer get loss in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if buyer is in profit and also seller has to get total loss. Spot Price 230 Strike Price 215.65 Amount -14.35 Premium received (+) 8.9 Loss -5.45*1000=-5450 Already Premium Received So, he can get Loss up to Rs 5450 Because it is Loss, OUT OF THE MONEY Contract, hence seller gets more Loss , incase Spot price increases above strike price seller can get profit in premium.

108

HUL(May Options) Strike Price=230

275 250 225 200 175 150 125 100 75 50 25 0 Stock Price

Underlying value Call Price Put Price

Date

On 7th may 09 HUL lost market shares to rivals in March ended quarter. so that share value decreased slightly. On 11th may 09 HUL has announced its numbers for the quarter ended January-March 2009. Its net profit increased 3.7% to Rs 394.99 crore from Rs 380.9 crore. Its operating profit margin (OPM) went up 302 bps at 13.77% versus 10.75% and adjusted profit after tax (APAT) rose 32.67% to Rs 502.08 crore versus Rs 378.43 crore. The company's net sales advanced 5.1% to Rs 3,988.33 crore as against Rs 3,793.9 crore. HUL has reported exceptional loss of Rs 107.09 crore versus gain of Rs 2.5 crore.Its Exports Sales down 44.7% at Rs 220.47 crore versus Rs 398.93 crore EBIT margins up 208bps at Rs 6.5% versus 4.4%

109

Instrum ent

Symbol

Date

Expiry

Op en

High

Low

Clos e

LTP

Settl e Price 240 238. 4 235. 65 230. 8 233. 1 226. 7 226 221. 9 225. 5 225. 25 238. 3 230. 7 233. 45 230. 3 231. 85 232. 8 230. 2 230. 6 231

FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK

HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR

4-May09 5-May09 6-May09 7-May09 8-May09 11-May09 12-May09 13-May09 14-May09 15-May09 18-May09 19-May09 20-May09 21-May09 22-May09 25-May09 26-May09 27-May09 28-May09

28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09

237 .8 238 237 .5 236 230 .65 234 228 226 220 226 .95 238 242 .2 228 .95 234 230 .9 230 .2 232 .1 231 .5 230 .85

242. 5 241. 55 240. 35 237. 85 234. 4 236 228 227 226 227 241. 5 243. 9 235. 5 234 233. 9 234. 85 235. 4 233 233. 55

234. 6 236. 2 233. 25 229. 05 230. 65 226. 1 222. 75 221. 05 218. 75 224. 6 230. 05 225. 5 226. 1 227. 1 228. 1 229. 15 228. 1 227. 6 228. 35

240 238. 4 235. 65 230. 8 233. 1 226. 7 226 221. 9 225. 5 225. 25 238. 3 230. 7 233. 45 230. 3 231. 85 232. 8 230. 2 230. 6 231. 1

239. 8 237. 8 234. 8 230. 6 232. 95 226. 15 226. 2 221. 5 225. 9 225. 5 240 229. 5 233 229. 8 232. 2 232. 15 230

No. of contr acts 4154 2509 3286 3907 3327 3303 2820 3590 3666 1953 66 7803 4357 2691 3421

Open Int Turnov er in lacs 9921.02 6000.31 7757.95 9129.2 7762.84 7542.72 6337.17 8030.4 8142.34 4406.49 157.03 17966.6 2 10003.0 6 6197.84 7912.2

Change in OI

9431000 9095000 9680000 9177000 9268000 9478000 10006000 10659000 10473000 10767000 10733000 11289000 10733000 9957000 8637000

-204000 -336000 585000 -503000 91000 210000 528000 653000 -186000 294000 -34000 556000 -556000 -776000 132000 0 257800 0 131200 0 -772000 -512000

FUTSTK

4485

10442.5

6059000

FUTSTK

3779

8793.4

4747000

FUTSTK FUTSTK

230. 5 231. 1

6303 2767

14501.8 6401.78

3975000 3463000

110

HUL(May Futures)
S t o c k 250 245 240 235 230 225 220 215 P 210 r 205 i c e Date

Underlying Price Future Price

Future Market BUYER

12/05/09(buying) 28/05/09(Closing Period) 226 221 Profit = 5 Profit 5*1000=5000

SELLER
226 221 Loss = 5

Loss 5*1000=5000

Because buyer Future price will increase so, profit also increases. Seller Future price also increases so, he can get loss. Incase seller Future will decreases, he can get profit. The closing Price of HUL at the end of contract period is 221 and this is considered as settlement price.

111

HUL JUNE MONTH ANALYSIS

Symbol HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR

Seri es EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ

Date 1-Jun09 2-Jun09 3-Jun09 4-Jun09 5-Jun09 8-Jun09 9-Jun09 10-Jun09 11-Jun09 12-Jun09 15-Jun09 16-Jun09 17-Jun09 18-Jun09 19-Jun09 22-Jun09 23-Jun09 24-Jun09 25-Jun09 26-Jun09 29-Jun09 30-Jun09

Prev Close 230.8 232.6 5 233.7 5 239.7 249.5 252 252.2 5 256.7 5 264.3 5 259.9 5 255.7 5 259.1 5 268.4 261.6 259.7 5 260.7 5 259.2 5 260.0 5 263.5 9 258.9 5 266.0 5 266.6

Open Price 228.5 5 233.1 235 236.5 250.2 5 252 252 257 264 257 257.9 258 267 261.2 5 260.5 260.5 5 259.2 5 261 262.0 5 259.6 5 266 265

High Price 233.4 5 235.1 5 241 251 257.7 253.5 259 269.9 264.9 258.5 262.8 5 265.7 5 267 265.5 263 263.5 262 264.3 5 265.4 268 269.7 271.4 5

Low Price 228.5 5 232.5 5 233.4 5 236.5 246.2 245.3 5 248.2 5 256 258.5 252 252.1 5 257.7 256.4 257.6 259.0 5 252.4 255.7 258 257 257.6 262.2 5 264.6 5

Last Price 232.2 233.5 238 249.3 252 252.1 5 257 263.6 260.2 256.0 5 262.7 5 265.3 5 261.9 5 260.1 260.6 259.3 260 261.9 5 257.7 266.6 268 269

Close Price 232.6 5 233.7 5 239.7 249.5 252 252.2 5 256.7 5 264.3 5 259.9 5 255.7 5 259.1 5 268.4 261.6 259.7 5 260.7 5 259.2 5 260.0 5 263.5 9 258.9 5 266.0 5 266.6 267.5

Averag e Price 231.93 233.51 236.7 247.75 252.91 249.27 253.55 263.99 260.92 255.52 258.77 260.06 261.1 261.07 260.47 260.03 259.54 261.39 259.46 262.47 266.98 269.18

Total Traded Quantity 2701891 3417724 4986667 4636344 4499129 2847980 2932775 6277803 3587460 4793781 4900720 2197923 2993196 2837816 1906831 5785095 3885451 2005337 6800388 3310926 2878839 4224981

Turnover in Lacs 6266.587392 7980.572611 11803.6118 11486.59379 11378.87204 7099.03176 7436.116014 16573.06262 9360.251865 12249.10305 12681.51215 5716.010496 7815.193043 7408.632434 4966.735851 15042.96081 10084.41348 5241.832353 17644.56393 8690.258465 7685.9485 11372.90613

112

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts. Open Price=228 On 1st June 09 Low Price=228 On 2nd june 09 High Price=271 On 30th june 09 Close price=267 On 30th june 09

In the above graph I calculate Breakeven point for GMRINFRA Stock. Break Even Point(BEP) = (High Price + Low Price)/2 = (228+271)/2 = 249 Again I found margin of safety (MOS) (1) Margin of safety (mos) = opening share value BEP =228-249 =-13 113

So here margin of safety is negative value. So here investor gets more Loss and longs. Here investor can buy put options to get more profits. Investors should not go for call options at this point (2) Margin of safety (mos) =high share value BEP =271-249 =22 So here margin of safety is Positive value. So here investor gets more profits and longs. So at this point investor can sell their Call options to get more profits. (3) Margin of safety (mos) =LOW share value BEP =228-249 =-13 So here margin of safety is negative. so here investor gets more losses and more shorts. Investor can sell their Put Option at this point to incur more profits.

114

HUL JUNE MONTH CALL TABLE(Strike Price=250):Instrument OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symbol HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR Option CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA Date 1-Jun-09 2-Jun-09 3-Jun-09 4-Jun-09 5-Jun-09 8-Jun-09 9-Jun-09 10-Jun-09 11-Jun-09 12-Jun-09 15-Jun-09 16-Jun-09 17-Jun-09 18-Jun-09 19-Jun-09 22-Jun-09 23-Jun-09 24-Jun-09 25-Jun-09 Expiry 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 Strike Price 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 Close 2.9 3 4.1 7.65 7.7 7.85 9.7 15.35 11.25 10.25 13.9 15.85 13.45 11.3 14.2 10.4 10.4 13.5 10.95 Settle Price 2.9 3 4.1 7.65 7.7 7.85 9.7 15.35 11.25 10.25 13.9 15.85 13.45 11.3 14.2 10.4 10.4 13.5 0 Turnover in Lacs 192.03 131.49 768.74 1426.62 1060.57 510.86 866.42 513.23 151.99 140.24 125.75 39.6 55.23 52.88 26.31 31.28 33.95 15.82 20.78

115

OBSERVATIONS AND FINDINGS JUNE CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of HUL that is 1000 those who buy for 250 paid 2.9 Premium Per Share. Settlement Price is 263.5 Spot price 263.5 Strike price 250.00 Amount 13.5 Premium Paid (-) 2.9 Net Profit 10.6*1000=10600 Buyer Profit = Rs 10600(Net Amount) Because it is positive it is IN THE MONEY contract, hence buyer will get more profit, incase spot price increase buyer profit also increases.

SELLERS PAY OFF:

It is in the money for the buyer, so it is n out of the money for seller , hence his loss is also increases. Strike price 263.5 Spot price 250.00 Amount Premium Received Loss -13.5 2.9 -10.6*1000=-10600

Seller loss = Rs -10600(Loss) Because it is negative it is out of the money, hence seller will get more loss, incase spot price decreases in below strike price, seller get profit in premium level.

116

HUL JUNE MONTH PUT OPTION TABLE:Instrument OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symbol HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR HINDUNILVR Option PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA Date 1-Jun-09 2-Jun-09 3-Jun-09 4-Jun-09 5-Jun-09 8-Jun-09 9-Jun-09 10-Jun-09 11-Jun-09 12-Jun-09 15-Jun-09 16-Jun-09 17-Jun-09 18-Jun-09 19-Jun-09 22-Jun-09 23-Jun-09 24-Jun-09 25-Jun-09 Expiry 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 Strike Price 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 Close 21.35 21.35 21.35 10.85 9.2 9 6.15 3.85 5 4.55 2.85 1.55 1.85 1.55 1 0.85 0.55 0.15 0.05 Settle Price 20.25 19.1 14.95 10.85 9.2 9 6.15 3.85 5 4.55 2.85 1.55 1.85 1.55 1 0.85 0.55 0.15 0 Turnover in Lacs 0 0 0 28.73 114 57.24 380.16 449.25 249.56 135.03 220.52 153.75 125.93 125.77 160.81 60.18 77.79 22.52 20.01

117

OBSERVATIONS AND FINDINGS JUNE PUT OPTION

BUYERS PAY OFF: Those who have purchase put option at a strike price 250, the premium payable is 21.1. On 17th june 09 taken as spot market price enclosed at 268.4
Strike Price 250 Spot price 268.4 Net Pay Off -18.4*1000=-18400 Already Premium paid is 20.25 So, he get loss up to Rs 18400 Because it is negative, out of the money contract, hence buyer gets more loss, incase spot price decrease in below strike price, buyer get profit in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if he is in profit and also seller has to get total profit. Spot Price 268.5 Strike Price 250.0 Net Pay off 18.4*1000=18400 Already Premium Received 20.25 So, he can get profit up to Rs 18400 Because it is positive, in the money Contract, hence seller gets more profit, incase Spot price decrease in below strike price seller can get loss in premium.

118

HUL(June Options)Strike Price=250

300 275 250 225 200 175 150 125 100 75 50 25 0

Stock Price

Underlying Price Call Price Put Price

Date

, HUL was among major gainers on the Sensex on 4th june 09. It was trading with volumes of 478,620 shares. So the share value increased drastically on 4th june 09. Hindustan Unilever has added 3.7 lakh shares in open interest. Rollovers are strong into this month so positive traction seen in HUL in June month. HUL plans to sell 49% stake in BPO arm by 2010 reported by ET on june 9th 09.Tthere is decrease in share value due to this news. HUL is up nearly Rs 10 with a build up of nearly 13 lakh shares in OI which is around 10% in a single trading session On 10th june 09. Which lifted up the share value.

119

HUL JUNE MONTH FUTURES TABLE:Instru ment Symbol Date Expiry Ope n Hig h Low Clos e LTP Settle Price No. of cont racts 2560 2196 4720 5599 4840 2659 2624 5705 2573 3087 2519 2574 5023 5677 3380 4174 3718 2352 3328 Open Int Turnover in lacs 5857.96 5051.82 11042.89 13653.05 12053.52 6544.39 6570.09 14884.37 6637.55 7878.33 6500.22 6717.66 13111.94 14897.88 8830.21 10881.56 9652.07 6145.22 8646.9 9537000 9463000 9505000 9016000 8533000 8801000 8955000 9495000 8949000 8466000 8729000 8840000 8348000 7856000 7220000 5564000 5194000 4824000 4046000 Change in OI

FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK FUTS TK

HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR

1-Jun09 2-Jun09 3-Jun09 4-Jun09 5-Jun09 8-Jun09 9-Jun09 10-Jun09 11-Jun09 12-Jun09 15-Jun09 16-Jun09 17-Jun09 18-Jun09 19-Jun09 22-Jun09 23-Jun09 24-Jun09 25-Jun09

25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09

228. 5 230 231. 4 236. 25 245. 3 248. 2 246. 55 254 261. 1 257. 2 257. 5 260 264 261. 2 260. 9 261. 15 259. 9 262. 7 262. 9

230 .45 231 .3 237 .45 247 .45 255 249 .65 254 .2 266 .65 261 .95 257 .5 262 .9 266 .35 264 265 .8 263 .8 263 .4 262 .3 264 .1 264

227 229. 1 230. 5 235. 5 242. 5 242. 55 246. 3 254 255 252. 25 252. 5 257. 8 259. 35 258. 4 259. 35 257. 65 255. 55 258. 25 258. 1

230 230. 3 236. 15 246. 35 248. 45 248. 65 252. 95 261. 5 256. 65 255. 7 260. 45 264 261. 35 260. 6 262. 05 259. 65 260 263. 4 258. 9

230. 2 230. 05 235 246. 25 249. 25 248. 7 252. 8 261. 25 257. 2 256. 5 262. 15 264 261. 05 261. 15 261. 8 259 259. 95 263. 2 258. 9

230 230.3 236.15 246.35 248.45 248.65 252.95 261.5 256.65 255.7 260.45 264 261.35 260.6 262.05 259.65 260 263.4 258.95

102000 -74000 42000 -489000 -483000 268000 154000 540000 -546000 -483000 263000 111000 -492000 -492000 -636000 -1656000 -370000 -370000 -778000

120

HUL(June Futures)
270 260 Stock Price 250 240 230 220 210 Underlying Price Future Price

Date

Future Market BUYER

12/06/09(buying) 29/06/09(Closing Period) 255.7 258.95 Profit = 3.25 Profit 3.25*1000=3250

SELLER
255.7 258.95 Loss =3.25 Loss 3.25*1000=3250

Because buyer Future price will increase so, profit also increases. Seller Future price also increases so he can get loss. Incase seller Future will decreases, he can get profit. The closing Price of HUL at the end of contract period is 258.95 and this is considered as settlement price.

121