Derivatives Project

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INTRODUCTION

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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.
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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.

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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.

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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.
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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.

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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)

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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)

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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.
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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 YEAR
Bombay stock exchange,
Ahmedabad share and stock brokers association
Calcutta stock exchange association Ltd,
Delhi stock exchange association Ltd,
Madras stock exchange association Ltd,
Indoor stock brokers association,
Bangalore stock exchange,
Hyderabad stock exchange,
Cochin stock exchange,

1875
1957
1957
1957
1957
1958
1963
1943
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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

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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 Annual turnover
1986 146 millions
1992 453 millions
1998 1329 millions
2002 & 2003 it has reached to equivalent stage of cash market
Derivatives are used by banks, securities firms, companies and investors to hedge risks, to
gain access to cheaper money and to make profits Derivatives are likely to grow even at a faster
rate in future they are first of all cheaper to world have met the increasing volume of products
tailored to the needs of particular customers, trading in derivatives has increased even in the over
the counter markets.
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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 include-
1. A security derived from a debt instrument, share, and loan whether secured or unsecured, risk
instrument or contract for differences or any other form of security.
2. A contract, which derives its value from the prices, or index of prices, of underlying
securities.
Derivatives are the securities under the SC(R)A and hence the trading of derivatives is
governed by the regulatory framework under the SC(R)A.

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

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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.

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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.
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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 well-
capitalized and actively traded scripts mandated by SEBI.
Nifty is the underlying asset of the Index Futures at the Futures & Options segment of NSE
with a market lot of 200 and the BSE 30 Sensex is the underlying stock index with the market lot
of 50. This difference of market lot arises due to a minimum specification of a contract value of
Rs. 2 lakhs by Securities Exchange Board of India. A contract value is contracting Index laid by
its market lot. For e.g. If Sensex is 4730 then the contract value of a futures Index having Sensex
as underlying asset will Be 50 x 4730 = Rs. 2,36,500. Similarly if Nifty is 1462.7, its futures
contract value will be 200 x 1462.7 = Rs.2, 92,540/-.
Every transaction shall be in multiple of market lot. Thus, Index futures at NSE shall be
traded in multiples of 200 and at BSE in multiples of 50

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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).

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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.
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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.

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FUTURES

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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
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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.

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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.

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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.

26

OPTIONS

27

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.
28

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.
29

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

30

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
at the settlement date only. They are not
obligated to perform before that date.
4) The holder of the contract is exposed to the
entire spectrum of downside risk and had the
potential for all upside return.
5) In futures margins to be paid. They are
approximate 15-20% on the current stock
price.

OPTIONS
1) Only the seller (writer) is obligated to perform.
2) With options, the buyer pays the seller a
premium.
3) The buyer of an options contract can exercise
any time prior to expiration date.
4) The buyer limits the downside risk to the option
premium but retain the upside potential.
5) In options premiums to be paid. But they are
very less as compared to the margins.

3.7 Advantages of option trading:

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

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

31

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

Receives premium
Obligation to buy shares if exercised
Profits from rising prices or remaining
neutral
Potentially unlimited losses, limited gain

32

ABOUT SHAREKHAN

33

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.
34

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
35

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.

36

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
37

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
38

DATA ANALYSIS
&
INFERENCE

39

GMR INFRASTRUCTURE

40

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

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

41

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)

42

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.
43

44

45

46

47

5.1.2 GMR INFRA MAY MONTH ANALYSIS
GMR INFRA MAY EQUITY TABLE:-
Symb
ol
Ser
ies
Date Prev
Close
Open
Price
High
Price
Low
Price
Last
Price
Close
Price
Average
Price
Total
Traded
Quantity
Turnover in
Lacs
GMRI
NFRA
EQ 4-May-
09
113 118 119 115 116.35 116.6 117.27 4966641 5824.518409
GMRI
NFRA
EQ 5-May-
09
116.6 117.5 122.4 115 118.85 119.3
5
119.71 7553513 9042.489716
GMRI
NFRA
EQ 6-May-
09
119.3
5
120.8 122.9 113.35 116.4 115.2
5
119.36 6326565 7551.337826
GMRI
NFRA
EQ 7-May-
09
115.2
5
116.7 118.4
5
114.15 116.55 116.1
5
116.06 5089291 5906.878162
GMRI
NFRA
EQ 8-May-
09
116.1
5
117 117.7 112.1 117.1 117.1 115.61 3900000 4508.909404
GMRI
NFRA
EQ 11-May-
09
117.1 118.7
5
119.6
5
111 111.15 111.9 113.67 3316682 3770.069377
GMRI
NFRA
EQ 12-May-
09
111.9 112.9 117 110.55 115.85 115.9
5
114.15 4161604 4750.46704
GMRI
NFRA
EQ 13-May-
09
115.9
5
117 117.8 110.15 110.55 111.3 114.24 4696165 5364.980309
GMRI
NFRA
EQ 14-May-
09
111.3 110.5 112.9
5
105.6 112.25 112.4 110.83 3605092 3995.469767
GMRI
NFRA
EQ 15-May-
09
112.4 113.6
5
117.7 112.25 112.5 113.4 115.06 4462193 5134.164822
GMRI
NFRA
EQ 18-May-
09
113.4 122.9 147 122.9 134.7 137.3 135.08 62439 84.340472
GMRI
NFRA
EQ 19-May-
09
137.3 145 157.9
5
121.65 149.3 152.9
5
145.66 21068986 30689.75392
GMRI
NFRA
EQ 20-May-
09
152.9
5
148 165.9
5
142.35 159.7 158.4
5
159.52 11364457 18129.00169
GMRI
NFRA
EQ 21-May-
09
158.4
5
158 173 158 172.2 170.2
5
167.96 18201627 30570.93059
GMRI
NFRA
EQ 22-May-
09
170.2
5
171 173.6
5
161.15 168.15 168.6
5
167.66 11647961 19528.54452
GMRI
NFRA
EQ 25-May-
09
168.6
5
170 171.4
5
162.3 164.2 164.9 165.19 5937486 9808.248222
GMRI
NFRA
EQ 26-May-
09
164.9 168 172.4 155.25 158.5 157.4
5
166.26 12411987 20636.71993
GMRI
NFRA
EQ 27-May-
09
157.4
5
161.1 167.3 161.1 163.6 163.7 164.27 10949461 17987.06952
GMRI
NFRA
EQ 28-May-
09
163.7 164 168 160.85 163.45 162.4 163.65 10002596 16368.87623
GMRI
NFRA
EQ 29-May-
09
162.4 165 169.4 162 162.9 164.5
5
166.61 12791895 21312.62356

48

Interpretation:-
This analysis is useful to know where to buy and sell the options such as Call and Puts.
Open Price=118 On 4
th
May 09
Low Price=110.15 On 13
th
May 09
High Price=173.65 On 22
nd
May 09
Close price=164.55 On 29
th
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
49

=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.

50

GMRINFRA MAY CALL OPTION TABLE(Strike price=135)
Instrument Symbol Opti
on
Date Expiry Strike
Price
Clos
e
Settle Price Turnover in
Lacs
OPTSTK GMRINFRA CA 4-May-09 28-May-09 135 8.05 3.1 0
OPTSTK GMRINFRA CA 6-May-09 28-May-09 135 2 2 6.85
OPTSTK GMRINFRA CA 7-May-09 28-May-09 135 2 2.2 0
OPTSTK GMRINFRA CA 13-May-09 28-May-09 135 0.65 0.65 6.78
OPTSTK GMRINFRA CA 28-May-09 28-May-09 135 3 0 0

51

OBSERVATIONS AND FINDINGS
MAY CALL OPTIONS

Buyers Pay OFF:
As brought 1 Lot of GMRINFRA that is 1250 those who buy for 135 paid 3.1
Premium Per Share.
Settlement Price is 163.75

Spot price 163.75
Strike price 135.00
Amount 28.75
Premium Paid (-) 3.1
Net Profit 25.65*1250=32062.5
Buyer Profit = Rs 32062.5(Net Amount)
Because it is positive it is IN THE MONEY contract, hence buyer will get more profit,
incase spot price increase buyer profit also increases.

SELLERS PAY OFF:
It is in the money for the buyer, so it is n out of the money for seller , hence his loss is
also increases.
Strike price 135.00
Spot price 163.75
Amount -28.75
Premium Received 3.1
Loss -25.65*1250=-32062.5
Seller loss = Rs -32062.5(Loss)
Because it is negative it is out of the money, hence seller will get more loss, incase spot
price decreases in below strike price, seller get profit in premium level.

52

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

Instrument Symbol Option Date Expiry Strike
Price
Settle Price
OPTSTK GMRINFRA PA 4-May-09 28-May-09 135 21.1
OPTSTK GMRINFRA PA 15-May-09 28-May-09 135 22
53

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.

54

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 14
th
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 14
th
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.

0
20
40
60
80
100
120
140
160
180
P
r
i
c
e

Date
GMR(May Options) Strike Price=135
Put Price
Call Price
Average GMR Price
55

GMRINFRA MAY FUTURE ANALYSIS:-
The Objective of this analysis is to evaluate the profit/loss position futures . This analysis is based on
sample data taken of GMR INFRA scrip. This analysis considered the May Contract on GMRINFRA.
The lot size of GMRINFRA is 1250,the time period in which this analysis done is from 4-05-2009 to 28-
05-2009.
Instru
ment
Symbo
l
Date Expiry Ope
n
Hig
h
Low Close LTP Settle
Price
No. of
contracts
Turnover in
acs
Open Int
FUTS
TK
GMRIN
FRA
4-May-
09
28-May-
09
114.
8
117
.45
113.
9
115.85 115.3
5
115.85 1349 7819.73 13775000
FUTS
TK
GMRIN
FRA
5-May-
09
28-May-
09
115.
6
122 115.
6
119 118.3
5
119 2680 15975.69 14290000
FUTS
TK
GMRIN
FRA
6-May-
09
28-May-
09
119 122
.25
112.
2
114.6 115.5
5
114.6 2351 13944.95 13865000
FUTS
TK
GMRIN
FRA
7-May-
09
28-May-
09
116 117
.5
113.
2
115.7 116.4 115.7 1331 7675.46 14410000
FUTS
TK
GMRIN
FRA
8-May-
09
28-May-
09
116.
4
117 111.
1
116.25 116.2 116.25 1505 8628.95 13980000
FUTS
TK
GMRIN
FRA
11-May-
09
28-May-
09
117.
5
118
.7
110.
2
111.35 110.6 111.35 1129 6389.69 14010000
FUTS
TK
GMRIN
FRA
12-May-
09
28-May-
09
112.
5
116
.5
110.
2
115.85 115.8 115.85 1521 8651.9 14605000
FUTS
TK
GMRIN
FRA
13-May-
09
28-May-
09
116.
25
117
.5
110.
35
111 111.0
5
111 1614 9199.92 14660000
FUTS
TK
GMRIN
FRA
14-May-
09
28-May-
09
108 112
.9
106.
7
112.35 112.4
5
112.35 1210 6685.31 14835000
FUTS
TK
GMRIN
FRA
15-May-
09
28-May-
09
113.
5
117
.3
112.
25
113.25 112.4 113.25 1281 7353.81 14650000
FUTS
TK
GMRIN
FRA
18-May-
09
28-May-
09
130 137
.9
126.
2
133.65 133.8
5
133.65 56 372.71 14590000
FUTS
TK
GMRIN
FRA
19-May-
09
28-May-
09
144 156 121 152.95 150 152.95 5193 37561.15 13130000
FUTS
TK
GMRIN
FRA
20-May-
09
28-May-
09
150.
55
165
.8
149.
9
159.55 161.3
5
159.55 3652 29226.09 10380000
FUTS
TK
GMRIN
FRA
21-May-
09
28-May-
09
160 174
.1
159 171.95 173.4 171.95 7575 64043.81 13000000
FUTS
TK
GMRIN
FRA
22-May-
09
28-May-
09
171.
8
174 161.
7
169.7 169.2 169.7 4733 39911.74 12290000
FUTS
TK
GMRIN
FRA
25-May-
09
28-May-
09
170.
7
172 162.
8
165.5 164.9
5
165.5 2175 18036.04 10775000
FUTS
TK
GMRIN
FRA
26-May-
09
28-May-
09
165 172
.75
155.
25
157.65 158.9
5
157.65 4685 39076.79 8760000
FUTS
TK
GMRIN
FRA
27-May-
09
28-May-
09
162.
9
167 162.
15
164.05 164.5 164.05 2533 20823.31 7075000
FUTS
TK
GMRIN
FRA
28-May-
09
28-May-
09
164.
05
168
.4
160.
95
162.4 162.4 162.4 2779 22805.69 2320000

56

Future Market
BUYER SELLER
12/05/09(buying) 115.85 115.85
28/05/09(Closing Period) 162.4 162.4
Profit = 46.55 Loss = 46.55
Profit 46.55*1250=58187 Loss 46.55*1250=58187
Because buyer Future price will increase so, profit also increases. Seller Future price also
increases so he can get loss. Incase seller Future will decreases, he can get profit.
The closing Price of GMRINFRA at the end of contract period is 162.4 and this is
considered as settlement price.

0
30
60
90
120
150
180
210
4
-
M
a
y
-
0
9
6
-
M
a
y
-
0
9
8
-
M
a
y
-
0
9
1
0
-
M
a
y
-
0
9
1
2
-
M
a
y
-
0
9
1
4
-
M
a
y
-
0
9
1
6
-
M
a
y
-
0
9
1
8
-
M
a
y
-
0
9
2
0
-
M
a
y
-
0
9
2
2
-
M
a
y
-
0
9
2
4
-
M
a
y
-
0
9
2
6
-
M
a
y
-
0
9
2
8
-
M
a
y
-
0
9
P
r
i
c
e

Date
GMRINFRA(May Futures)
Average GMR Price
Future Price
57

5.1.3 GMR INFRA JUNE MONTH ANALYSIS
GMRINFRA JUNE EQUITY:-
Symbol Seri
es
Date Prev
Close
Open
Price
High
Price
Low
Price
Last
Price
Close
Price
Average
Price
Total
Traded
Quantity
Turnover in
Lacs
GMRINF
RA
EQ 1-Jun-
09
164.55 167 176.4 162.55 175.2 175.1 171.15 19950076 34144.15905
GMRINF
RA
EQ 2-Jun-
09
175.1 178.9 180.85 168.1 172.2 172.9 173.62 15822276 27470.65369
GMRINF
RA
EQ 3-Jun-
09
172.9 176.9 177.35 167.15 171.95 172.75 173.15 11234059 19451.91789
GMRINF
RA
EQ 4-Jun-
09
172.75 172.1 179.9 172 178 177.75 177.94 16706677 29728.11388
GMRINF
RA
EQ 5-Jun-
09
177.75 180 183.5 169.05 170.45 170.55 177.04 17578054 31120.95275
GMRINF
RA
EQ 8-Jun-
09
170.55 174.9 174.9 156.7 157.75 160.2 165.28 16210921 26793.31401
GMRINF
RA
EQ 9-Jun-
09
160.2 159.8 170 149.05 167.35 166.55 161.3 19634278 31670.47058
GMRINF
RA
EQ 10-Jun-
09
166.55 169 172 158 162.9 162.55 165.35 12369000 20452.47894
GMRINF
RA
EQ 11-Jun-
09
162.55 163.4 145.36 136 137.45 138 147.29 14231441 22669.03497
GMRINF
RA
EQ 12-Jun-
09
138 157 163.2 152.4 158.8 159.45 158.88 23539810 37400.17848
GMRINF
RA
EQ 15-Jun-
09
159.45 155 157 146 148.05 147.65 150.89 13210538 19933.32656
GMRINF
RA
EQ 16-Jun-
09
147.65 145.1 153 142.1 150.6 151.35 149.6 11553437 17284.0867
GMRINF
RA
EQ 17-Jun-
09
151.35 151 154 142.1 143.95 143.95 148.91 10745434 16001.49497
GMRINF
RA
EQ 18-Jun-
09
143.95 145 146.8 137.2 143.85 143.15 142 11585108 16450.62817
GMRINF
RA
EQ 19-Jun-
09
143.15 145.05 148.9 141.8 147.95 147.3 146 8967831 13093.16327
GMRINF
RA
EQ 22-Jun-
09
147.3 149.9 151 138.65 139 139.75 144.75 11218177 16237.97072
GMRINF
RA
EQ 23-Jun-
09
139.75 135.1 142.7 134.45 138.25 138.6 139.05 14718034 20464.88749
GMRINF
RA
EQ 24-Jun-
09
138.6 140 142.3 135.7 139.15 139.2 139.45 11490518 16022.96305
GMRINF
RA
EQ 25-Jun-
09
139.2 140.35 141.5 133.25 135.45 134.75 136.88 13960618 19108.99344
GMRINF
RA
EQ 26-Jun-
09
134.75 137 139.55 134.1 137.35 136.75 137.11 9372467 12850.29593
GMRINF
RA
EQ 29-Jun-
09
136.75 138.15 157.25 138.15 154.35 155.15 151.77 43432666 65915.85738
GMRINF
RA
EQ 30-Jun-
09
155.15 155.9 157.25 140.1 141.35 141.85 145.57 23533314 34256.29143
58

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

In the above graph I calculated Break Even point for GMRINFRA Stock for June
Month.
= (183.5+133.25)/2
= 158.37
59

=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
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.

60

GMRINFRA JUNE CALL OPTION TABLE(Strike Price=155) :-
Price
Settle Price
OPTSTK GMRINFRA CA 1-Jun-09 25-Jun-09 155 29.4
OPTSTK GMRINFRA CA 25-Jun-09 25-Jun-09 155 0

61

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 11
th
june 09 is 138.Such as Call option is sold on 11
th
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.

62

GMRINFRA JUNE PUT OPTION TABLE(Strike Price=155):-
Instrument Symbol Option Date Expiry Strike Price Settle Price
OPTSTK GMRINFRA PA 1-Jun-09 25-Jun-09 155 8.9
PTSTK GMRINFRA PA 4-Jun-09 25-Jun-09 155 6.2
OPTSTK GMRINFRA PA 25-Jun-09 25-Jun-09 155 0

63

JUNE PUT OPTION
BUYERS PAY OFF:
Those who have purchase put option at a strike price 135, the premium payable is 8.9.
On the expiry date the spot market price enclosed at 155.95.

Strike Price 155
Spot price 139.2
Amount 15.8
Premium Paid(-) 8.9
Profit 6.9*1250=8625

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

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.
64

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

65

Future Market
BUYER SELLER
12/06/09(buying) 159.4 159.4
26/06/09(Closing Period) 134.7 134.7
Loss = 24.7 Profit = 24.7
Loss 24.7*1250=30875 Profit 24.7*1250=30875
Because buyer Future price will decreases so, loss also increases. Seller Future price
decreases so he can get profit. Incase seller Future will increases, he can get Loss.
The closing Price of GMRINFRA at the end of contract period is 134.7 and this is
considered as settlement price.

0
20
40
60
80
100
120
140
160
180
200
1
-
J
u
n
-
0
9
3
-
J
u
n
-
0
9
5
-
J
u
n
-
0
9
7
-
J
u
n
-
0
9
9
-
J
u
n
-
0
9
1
1
-
J
u
n
-
0
9
1
3
-
J
u
n
-
0
9
1
5
-
J
u
n
-
0
9
1
7
-
J
u
n
-
0
9
1
9
-
J
u
n
-
0
9
2
1
-
J
u
n
-
0
9
2
3
-
J
u
n
-
0
9
2
5
-
J
u
n
-
0
9
P
r
i
c
e

Date
GMR(June Futures)
Average GMR Price
Future Price
66

PUNJAB NATIONAL BANK

67

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.

68

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 Mar'07 Mar'08 Mar'09 CRAR
Operating Profit* 3617 4006 5744 26.02
Net Profit* 1540 2049 3091 41.67
Deposit 139860 166457 209760 22.47
Advance 96597 119502 154703 26.55
Total Business 236456 285959 364463 24.15

69

70

71

72

73

74

75

5.2.2 PNB MAY MONTH ANALYSIS
PNB MAY EQUITY TABLE:-
Sym
bol
Serie
s
Date Prev
Close
Open
Price
High
Price
Low
Price
Last
Price
Close
Price
Averag
e Price
Total
Traded
Quantity
Turnover in
Lacs
PNB EQ 4-May-
09
477.9 494.4 506.5 485.
55
504 503.3 497.77 2609220 12987.88804
PNB EQ 5-May-
09
503.3 509.9 520 492.
4
502.
5
503.8
5
506.74 1981817 10042.75586
PNB EQ 6-May-
09
503.8
5
506 519.8 503.
65
506.
55
506.1 510.51 1732069 8842.385504
PNB EQ 7-May-
09
506.1 510 530 508.
35
529.
3
524.7
5
520.17 1153700 6001.256074
PNB EQ 8-May-
09
524.7
5
520.2 532 512.
1
528 528.7
5
522.01 1181648 6168.310954
PNB EQ 11-
May-09
528.7
5
526.2 534.7 512 521 522.1
5
522.44 1209101 6316.875369
PNB EQ 12-
May-09
522.1
5
522.1
5
553.5 515.
1
550.
45
550.1 539.31 2309184 12453.74827
PNB EQ 13-
May-09
550.1 550.3 574.5 545.
35
565 562.7
5
562.07 2296752 12909.26984
PNB EQ 14-
May-09
562.7
5
555 571.5
5
540.
55
563 562.2
5
563 2503026 14092.03063
PNB EQ 15-
May-09
562.2
5
565 589 561.
6
577 574.7
5
572.53 2465576 14116.18189
PNB EQ 18-
May-09
574.7
5
620 680 620 665 662.8 651.83 33068 215.548411
PNB EQ 19-
May-09
662.8 700 725 665 695 689.4 694.14 3124143 21685.98096
PNB EQ 20-
May-09
689.4 689 708.5 666.
15
679 676.6
5
689.33 1865804 12861.63709
PNB EQ 21-
May-09
676.6
5
689 697 663.
1
665 668.7
5
685.57 1894595 12988.77185
PNB EQ 22-
May-09
668.7
5
670 683 645.
6
659.
85
663.1
5
665.84 1137015 7570.647807
PNB EQ 25-
May-09
663.1
5
671.5 671.5 637.
8
643.
05
642.8
5
647.54 1350731 8746.542945
PNB EQ 26-
May-09
658.7 625.7 668.9 625.
7
668.
1
664.3 661.5 597170 3950.253605
PNB EQ 27-
May-09
642.8
5
643 669 635 636 639.6
5
649.99 679608 4417.400963
PNB EQ 28-
May-09
639.6
5
661 666 650 657 658.7 659.28 745123 4912.4816
PNB EQ 29-
May-09
664.3 670.1 676 662 670.
1
670.8 669.64 690021 4620.679415
76

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

= (725+485)/2
= 605
=494-605
77

=-111
point
=725-605
=120
=485-605
=-120

78

PNB MAY CALL OPTION TABLE(Strike Price=580):-
OPTSTK PNB CA 4-May-09 28-May-09 580 19.15
OPTSTK PNB CA 25-May-09 28-May-09 580 65
OPTSTK PNB CA 28-May-09 28-May-09 580 0

79

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.

Spot price 639.65
Strike price 580.00
Amount 59.65
Net Profit 40.5*300=12150
Buyer Profit = Rs 12150(Net Amount)

SELLERS PAY OFF:
also increases.
Strike price 580.00
Spot price 639.65
Amount -59.65
Loss -40.5*300=-12150
Seller loss = Rs -12150(Loss)
80

PNB MAY PUT OPTION TABLE(Strike Price=580):-
Instrument Symbol Option Date Expiry Strike Price Close Settle
Price
OPTSTK PNB PA 4-May-09 28-May-09 580 84.9 94.1
OPTSTK PNB PA 25-May-09 28-May-09 580 84.9 2
OPTSTK PNB PA 28-May-09 28-May-09 580 84.9 0

81

MAY PUT OPTION

BUYERS PAY OFF:
Those who have purchase put option at a strike price 580, the premium payable is 94.1
On 18
th
May 09 the spot price enclosed is 662.8 .here this put option sold on 18
th
may
09.

Strike Price 580
Spot price 662.8
Net Pay Off -82.8*300=-24840
So, he get loss up to Rs 24840

SELLERS PAY OFF:
total profit.

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

So, he can get profit up to Rs 24840

82

Punjab national bank minting money On 12
th
may 09 so its volumes are increasing. On
12
th
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 12
th
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 12
th
may onwards.
On 12
th
May there is drastic increase in total turnover in lacs from 6316.87 on 11
th
May 09
to 12456.74 on 12
th
May 09. Traded quantity increased from 12,09,101 on may 11
th
09 to
23,09,184 on 12
th
may 09. So the share price of PNB started increasing from 12
th
may 09.
On 20
th
may 09 PNB announced it will disinvest 26% stake in PNB Housing Finance to
Dawnay Day. So the share price decreased from 20
th
may onwards. Then call option values
started decreasing, put options values started increasing.

0
50
100
150
200
250
300
350
400
450
500
550
600
650
700
750
P
r
i
c
e

Date
PNB(May Options) strike Price=580
Average PNB Price
CALL price
Put price
SSS
83

PNB MAY FUTURES:-
Instr
ume
nt
Sym
bol
Date Expiry Ope
n
High Low Close LTP Settle
Price
No. of
contrac
ts
Turnover
in lacs
Open Int
FUTS
TK
PNB 4-May-
09
28-May-
09
484.
9
502.9 481.
5
498.8
5
497.
15
498.85 2947 8725.53 1602000
FUTS
TK
PNB 5-May-
09
28-May-
09
499 518 489.
3
499.7
5
500 499.75 3119 9415.69 1594800
FUTS
TK
PNB 6-May-
09
28-May-
09
503.
3
514.4
5
498 502.7
5
504.
7
502.75 3276 9949.45 1744200
FUTS
TK
PNB 7-May-
09
28-May-
09
509.
85
523 507.
25
519.8
5
522.
25
519.85 2423 7491.64 1746000
FUTS
TK
PNB 8-May-
09
28-May-
09
523.
8
527.4
5
506.
5
523.2 525 523.2 3050 9465.21 1978800
FUTS
TK
PNB 11-
May-09
28-May-
09
525.
5
528.6 505.
4
515.4
5
516.
4
515.45 2597 8045.32 2088600
FUTS
TK
PNB 12-
May-09
28-May-
09
515.
8
549.9
5
512.
2
547.2
5
547.
3
547.25 3899 12452.47 2382600
FUTS
TK
PNB 13-
May-09
28-May-
09
548 568.8 542 554.7
5
551.
05
554.75 3816 12752.89 2509800
FUTS
TK
PNB 14-
May-09
28-May-
09
543 563.8 536 556.7 556.
5
556.7 3215 10710.8 2779200
FUTS
TK
PNB 15-
May-09
28-May-
09
558.
1
582.9 555.
2
572.9
5
575.
7
572.95 3595 12325.3 2811000
FUTS
TK
PNB 18-
May-09
28-May-
09
658.
9
687 658.
9
682.5 685.
05
682.5 38 154.26 2803800
FUTS
TK
PNB 19-
May-09
28-May-
09
719.
7
747 674 689.3 686.
2
689.3 4601 19195.66 2431800
FUTS
TK
PNB 20-
May-09
28-May-
09
680 710 670.
2
680.5 683.
1
680.5 2683 11095.09 2452200
FUTS
TK
PNB 21-
May-09
28-May-
09
680 698 663.
2
668.4 663.
2
668.4 3335 13711.66 2196600
FUTS
TK
PNB 22-
May-09
28-May-
09
655.
25
680.7 647.
25
663.1 660.
8
663.1 3158 12590.17 1813200
FUTS
TK
PNB 25-
May-09
28-May-
09
664 666 638.
15
644.0
5
642.
1
644.05 3350 13020.47 1587000
FUTS
TK
PNB 26-
May-09
28-May-
09
648 659.5 630 634.4 633.
25
634.4 2059 8012.99 1307400
FUTS
TK
PNB 27-
May-09
28-May-
09
648 664 645.
3
661.5 660 661.5 1941 7661.76 1109400
FUTS
TK
PNB 28-
May-09
28-May-
09
661 668.4 653.
6
664.5 664.
5
664.3 1999 7934.09 663000

84

Future Market
BUYER SELLER
12/05/09(buying) 547.25 547.25
28/05/09(Closing Period) 664.5 664.5
Profit = 117.25 Loss =117.25
Profit 145.2*300=35175 Loss 117.25*300=35175
Because buyer Future price will increase so, profit also increases.Seller Future price also
The closing Price of PNB at the end of contract period is 664.5 and this is considered as
settlement price.

0
100
200
300
400
500
600
700
800
P
r
i
c
e

Date
PNB(May FUTURES) Strike Price=580
Average PNB Price
Future Price
85

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

86

Interpretation:-
Puts.
Open Price=684 On 1
st
June 09
Low Price=583 On 15
th
June 09
High Price= 694 On 30th June 09
th
June 09

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

87

=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
(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.

88

PNB JUNE PUT OPTION(Strike Price=640):-
OPTSTK PNB PA 1-Jun-09 25-Jun-09 640 37.85
OPTSTK PNB PA 24-Jun-09 25-Jun-09 640 19
OPTSTK PNB PA 25-Jun-09 25-Jun-09 640 0

89

JUNE PUT OPTION
BUYERS PAY OFF:
On 17
th
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


SELLERS PAY OFF:
total loss.

Spot Price 600.05
Strike Price 640.00
Amount -39.95
Loss -2.1*300=--630

90

PNB JUNE CALL OPTION(Strike Price=640):-
Price
Settle Price
OPTSTK PNB CA 1-Jun-09 25-Jun-09 640 63
OPTSTK PNB CA 3-Jun-09 25-Jun-09 640 55.2

91

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 9
th
june 09 is 615.1.Such as Call option is sold on 9
th
June

Spot price 615.1
Strike price 640.0
Amount -24.9
Net Loss -24.9*300=-7470

SELLERS PAY OFF:
Profit increases.
Strike price 640.00
Spot price 615.1
Amount 24.9
Profit 24.9*300=7470

92

PNB declines 6.7% On June 8
th
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 6
th
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 6
th
June 09 onwards.
PNB was the top gainer at the Nifty on June 18
th
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 18
th
09 hence call price also rise and put option prices
tend to decrease.
PNB Minting money on 15
th
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 11
th
June the share closed down 3.21% or Rs
19.65 at Rs 593.

0
100
200
300
400
500
600
700
800
1
-
J
u
n
-
0
9
3
-
J
u
n
-
0
9
5
-
J
u
n
-
0
9
7
-
J
u
n
-
0
9
9
-
J
u
n
-
0
9
1
1
-
J
u
n
-
0
9
1
3
-
J
u
n
-
0
9
1
5
-
J
u
n
-
0
9
1
7
-
J
u
n
-
0
9
1
9
-
J
u
n
-
0
9
2
1
-
J
u
n
-
0
9
2
3
-
J
u
n
-
0
9
S
t
o
c
k

P
r
i
c
e

Date
PNB June Options(strike Price=640)
Underlying Price
call Price
Put Price
93

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

94

Future Market
BUYER SELLER
12/06/09(buying) 593.6 593.6
25/06/09(Closing Period) 631.45 631.45
Profit = 37.85 Loss = 37.25
Profit 37.05*300=11355 Loss 37.25*300=11355
The closing Price of PNB at the end of contract period is 630.35 and this is considered as
settlement price.

540
560
580
600
620
640
660
680
S
t
o
c
k

P
r
i
c
e

Date
PNB(June Futures)
Underlying Price
Future Price
95

HINDUSTAN UNILEVER

96

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 Breeze
Lifebuoy Dove
Liril Pears
Hamam Rexona

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

Sunsilk Naturals Pepsodent
Clinic Closeup

97

Axe Lakme
Rexona

Ayush

Brooke Bond Brooke Bond Bru
Lipton

Kissan Kwality Wall's
Annapurna

Knorr

98

99

Merging
company

Merged with

Appointed
date

Effective
date

Date of
allotment

Share
ratio

Value of
fraction
(Rs.)
Kothari General
Foods
Corporation Ltd.
Brooke Bond
India Ltd.
1-Jan-92 1-Jan-92 30-Jun-92 21:1 7.00
Tea Estates India
Ltd.
Brooke Bond
India Ltd.
1-Jan-93 1-Jun-93
24-Aug-
93
10:12 35.25
Doom Dooma
India Ltd.
Brooke Bond
India Ltd.
1-Jan-93 1-Jun-93
24-Aug-
93
10:11 35.25
Kissan Products
Ltd.
Brooke Bond
India Ltd.
1-Apr-93
20-Jan-
94
22-Jan-94 1:100
Not
applicable
Lipton India Ltd. Brooke Bond
India Ltd.
[name changed to
Brooke Bond
Lipton India Ltd.
(BBLIL)]
1-Jul-93
9-Mar-
94
16-May-
94
10:9 48.99
The Tata Oil
Mills Company
Ltd.
Hindustan Lever
Ltd.
1-Apr-93
28-Dec-
94
5-Apr-95 15:2 38.86
BBLIL
Hindustan Lever
Ltd.
1-Jan-96
21-Mar-
97
16-May-
97
20:9 52.82
Pond's (India)
Ltd.
Hindustan Lever
Ltd.
1-Jan-98
15-Oct-
98
3-Mar-99 4:3 525.00
Industrial
Perfumes Ltd.
Hindustan Lever
Ltd.
1-Jan-99 9-Feb-00 23-Feb-00 5:2
Not
applicable
International
Bestfoods Ltd.
Hindustan Lever
Ltd.
1-Jun-01
26-Sep-
01
20-Oct-01 3:2* 73.84
Aviance Limited
Hindustan Lever
Ltd.
1-Jun-01
25-Sep-
01
Not
Applicable
Not
Applicable
Not
Applicable

Tea Estates India
Ltd. (Formerly
known
asThiashola Tea
Company
Limited) (TEI)
Demerger from
Hindustan Lever
Limited
1-Apr-05 1-Dec-05 02-Dec-05 ^
Not
Applicable
Doom Dooma Demerger from 1-Apr-05 1-Dec-05 02-Dec-05 ^^ Not
100

Tea Company
Ltd (Formerly
known as
Daverashola Tea
Company
Limited) (DDT)
Hindustan Lever
Limited
Applicable
Lever India
Exports Limited
Hindustan Lever
Ltd.
1-Apr-05
30-Dec-
05
Not
Applicable
Not
Applicable
Not
Applicable
Lipton India
Exports Limited
Hindustan Lever
Limited
1-Jan-05
30-Dec-
05
Not
Applicable
Not
Applicable
Not
Applicable
Merryweather
Food Products
Limited
Hindustan Lever
Limited
1-Jan-05
30-Dec-
05
Not
Applicable
Not
Applicable
Not
Applicable
TOC
Disinfectants
Limited
Hindustan Lever
Limited
1-Apr-05
30-Dec-
05
26-Apr-06 500:1 **
Not
Applicable
International
Fisheries Limited
Hindustan Lever
Limited
1-Jan-05
30-Dec-
05
26-Apr-06 1:1***
Not
Applicable
Vashisti
Detergents
Limited
Hindustan Lever
Limited
1-Jul-05
28-Feb-
06
10-Apr-06 10:1**** 28.00
Modern Food
Industries (India)
Limited &
Modern Food and
Nutrition
Industries
Limited
Hindustan Lever
Limited
1-Oct-06
30-Mar-
07
Not
Applicable
Not
Applicable
Not
Applicable
Shamnagar
Estates Private
Limited,
Jamnagar
Properties Private
Limited and
Hindustan
Kwality Walls
Foods Private
Limited (now
known as
Daverashola
Estates Private
Limited)
Demerger of
certain Units
from Hindustan
Lever Limited
1-Nov-06
29-Mar-
07
Not
Applicable
Not
Applicable
Not
Applicable
101

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

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

^ 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

102

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

Symbol Seri
es
Date Prev
Close
Open
Price
High
Price
Low
Price
Last
Price
Close
Price
Averag
e Price
Total Traded
Quantity
Turnover in
Lacs
HINDUNILVR EQ 4-May-
09
234.7
5
236 242 233.1 239.6 239.9 237.38 4896016 11622.20462
09
239.9 240 241.5 235.5 237.2 238.3
5
238.94 2813418 6722.363085
09
238.3
5
239.9 240.8
5
232.2 233.5 234.6 234.99 5167053 12141.97328
09
234.6 234.5 238 229.3
5
230.3 230.6
5
233.23 5075534 11837.50389
09
230.6
5
230.7
5
234.1
5
230 233.5 233.0
5
233.15 5443176 12691.00179
09
233.0
5
235.2
5
236.5 226 226.2 227.1
5
228.22 7025750 16034.23965
09
227.1
5
227.6 227.8
5
221.8 225.2 225.1 223.99 8210288 18390.49832
09
225.1 225.1 227.2 221.1 220.8 221.9
5
223.58 3149690 7042.135618
09
220.8 222 225.6
5
218.1 225 224.8
5
220.91 7493434 16553.85609
09
224.8
5
226 227.4 223.6
5
224.5
5
224.3 224.83 2449088 5506.23301
09
224.3 244.9
5
264.4 228 239 239.6 247.92 51515 127.7145265
09
239.6 245 251 224 230 229.5 228.66 13669545 31256.89658
09
229.5 234.9 235.8
5
225 232.9
5
233.4
5
228.92 10140045 23212.54873
09
233.4
5
233.2 235 226.5
5
230.0
5
230.4 229.92 2715676 6243.855165
09
230.4 231 234.3 228.1 232.8 232 231.58 2391122 5537.462276
09
232 231 235.5 229.9 231.7 233.0
5
233.36 3418801 7978.185038
09
233.0
5
238.7 238.7 229.5 231.4
5
231 233.77 3475193 8123.976091
09
231 233.3 233.3 228.1 230 230.1
5
229.72 3314721 7614.612061
09
230.1
5
232 233.5 228.5 230.8 231 231.19 5375654 12428.16871
09
231 232 233.9 229.5
5
231.5 230.8 230.91 4633440 10699.28036
103

Interpretation:-
Puts.
Open Price=236 On 4
th
May 09
Low Price=218 On 14
th
May 09
High Price=264 On 18
th
May 09
th
May 09

In the above graph I calculate Breakeven point for HUL Stock.
= (264+218)/2
= 241
=236-241
104

=-5
point
=264-241
=23
=218-241
=-23

105

HUL MAY MONTH CALL OPTION TABLE(Strike Price=230):-
Instrument Symbol Option Date Expiry Strike Price Close Settle Price Turnover in Lacs
OPTSTK HINDUNILVR CA 4-May-09 28-May-09 230 14.05 14.05 87.32
OPTSTK HINDUNILVR CA 8-May-09 28-May-09 230 10 10 62.45
OPTSTK HINDUNILVR CA 20-May-09 28-May-09 230 8 8 395.65
OPTSTK HINDUNILVR CA 28-May-09 28-May-09 230 0.8 0 383.37

106

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 13
th
may 09 is 220.8, such as call option sold on 13
th
may 09.

Spot price 220.8
Strike price 230.00
Amount -9.2
Net Loss -9.2*1000=-9200
SELLERS PAY OFF:
Profit increases.
Strike price 220.8
Spot price 230.00
Amount 9.2
Profit 9.2*1000=9200

107

HUL MAY MONTH PUT OPTION TABLE(Strike Price=230):-
Instrument Symbol Option Date Expiry Strike Price Close Settle Price Turnover
in Lacs
Open Int
OPTSTK HINDUNILVR PA 4-May-09 28-May-09 230 4.9 4.9 98.76 60000
OPTSTK HINDUNILVR PA 13-May-09 28-May-09 230 12.45 12.45 41 106000
OPTSTK HINDUNILVR PA 18-May-09 28-May-09 230 10.3 3.45 0 99000
OPTSTK HINDUNILVR PA 28-May-09 28-May-09 230 0.1 0 115.41 110000

108

MAY PUT OPTION
BUYERS PAY OFF:
On 12
th
may the spot market price enclosed at .

Strike Price 230
Spot price 215.65
Amount -14.35
Premium Paid(-) 8.9
Profit 5.45*1000=5450


SELLERS PAY OFF:
total loss.

Spot Price 230
Strike Price 215.65
Amount -14.35
Loss -5.45*1000=-5450


109

On 7
th
may 09 HUL lost market shares to rivals in March ended quarter. so that share value
decreased slightly.
On 11
th
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%

0
25
50
75
100
125
150
175
200
225
250
275
S
t
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Date
HUL(May Options) Strike Price=230
Underlying value
Call Price
Put Price
110

Instrum
ent
Symbol Date Expiry Op
en
High Low Clos
e
LTP Settl
e
Price
No.
of
contr
acts

Turnov
er in
lacs
Open Int Change
in OI
FUTSTK HINDUNIL
VR
4-May-
09
28-May-
09
237
.8
242.
5
234.
6
240 239.
8
240 4154 9921.02 9431000 -204000
FUTSTK HINDUNIL
VR
5-May-
09
28-May-
09
238 241.
55
236.
2
238.
4
237.
8
238.
4
2509 6000.31 9095000 -336000
FUTSTK HINDUNIL
VR
6-May-
09
28-May-
09
237
.5
240.
35
233.
25
235.
65
234.
8
235.
65
3286 7757.95 9680000 585000
FUTSTK HINDUNIL
VR
7-May-
09
28-May-
09
236 237.
85
229.
05
230.
8
230.
6
230.
8
3907 9129.2 9177000 -503000
FUTSTK HINDUNIL
VR
8-May-
09
28-May-
09
230
.65
234.
4
230.
65
233.
1
232.
95
233.
1
3327 7762.84 9268000 91000
FUTSTK HINDUNIL
VR
11-May-
09
28-May-
09
234 236 226.
1
226.
7
226.
15
226.
7
3303 7542.72 9478000 210000
FUTSTK HINDUNIL
VR
12-May-
09
28-May-
09
228 228 222.
75
226 226.
2
226 2820 6337.17 10006000 528000
FUTSTK HINDUNIL
VR
13-May-
09
28-May-
09
226 227 221.
05
221.
9
221.
5
221.
9
3590 8030.4 10659000 653000
FUTSTK HINDUNIL
VR
14-May-
09
28-May-
09
220 226 218.
75
225.
5
225.
9
225.
5
3666 8142.34 10473000 -186000
FUTSTK HINDUNIL
VR
15-May-
09
28-May-
09
226
.95
227 224.
6
225.
25
225.
5
225.
25
1953 4406.49 10767000 294000
FUTSTK HINDUNIL
VR
18-May-
09
28-May-
09
238 241.
5
230.
05
238.
3
240 238.
3
66 157.03 10733000 -34000
FUTSTK HINDUNIL
VR
19-May-
09
28-May-
09
242
.2
243.
9
225.
5
230.
7
229.
5
230.
7
7803 17966.6
2
11289000 556000
FUTSTK HINDUNIL
VR
20-May-
09
28-May-
09
228
.95
235.
5
226.
1
233.
45
233 233.
45
4357 10003.0
6
10733000 -556000
FUTSTK HINDUNIL
VR
21-May-
09
28-May-
09
234 234 227.
1
230.
3
229.
8
230.
3
2691 6197.84 9957000 -776000
FUTSTK HINDUNIL
VR
22-May-
09
28-May-
09
230
.9
233.
9
228.
1
231.
85
232.
2
231.
85
3421 7912.2 8637000 -
132000
0
FUTSTK HINDUNIL
VR
25-May-
09
28-May-
09
230
.2
234.
85
229.
15
232.
8
232.
15
232.
8
4485 10442.5 6059000 -
257800
0
FUTSTK HINDUNIL
VR
26-May-
09
28-May-
09
232
.1
235.
4
228.
1
230.
2
230 230.
2
3779 8793.4 4747000 -
131200
0
FUTSTK HINDUNIL
VR
27-May-
09
28-May-
09
231
.5
233 227.
6
230.
6
230.
5
230.
6
6303 14501.8 3975000 -772000
FUTSTK HINDUNIL
VR
28-May-
09
28-May-
09
230
.85
233.
55
228.
35
231.
1
231.
1
231 2767 6401.78 3463000 -512000
111

Future Market
BUYER SELLER
12/05/09(buying) 226 226
28/05/09(Closing Period) 221 221
Profit = 5 Loss = 5
Profit 5*1000=5000 Loss 5*1000=5000
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.

205
210
215
220
225
230
235
240
245
250
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e

Date
HUL(May Futures)
Underlying Price
Future Price
112

HUL JUNE MONTH ANALYSIS

Symbol Seri
es
Date Prev
Close
Open
Price
High
Price
Low
Price
Last
Price
Close
Price
Averag
e Price
Total Traded
Quantity
Turnover in Lacs
HINDUNILVR EQ 1-Jun-
09
230.8 228.5
5
233.4
5
228.5
5
232.2 232.6
5
231.93 2701891 6266.587392
09
232.6
5
233.1 235.1
5
232.5
5
233.5 233.7
5
233.51 3417724 7980.572611
09
233.7
5
235 241 233.4
5
238 239.7 236.7 4986667 11803.6118
09
239.7 236.5 251 236.5 249.3 249.5 247.75 4636344 11486.59379
09
249.5 250.2
5
257.7 246.2 252 252 252.91 4499129 11378.87204
09
252 252 253.5 245.3
5
252.1
5
252.2
5
249.27 2847980 7099.03176
09
252.2
5
252 259 248.2
5
257 256.7
5
253.55 2932775 7436.116014
09
256.7
5
257 269.9 256 263.6 264.3
5
263.99 6277803 16573.06262
09
264.3
5
264 264.9 258.5 260.2 259.9
5
260.92 3587460 9360.251865
09
259.9
5
257 258.5 252 256.0
5
255.7
5
255.52 4793781 12249.10305
09
255.7
5
257.9 262.8
5
252.1
5
262.7
5
259.1
5
258.77 4900720 12681.51215
09
259.1
5
258 265.7
5
257.7 265.3
5
268.4 260.06 2197923 5716.010496
09
268.4 267 267 256.4 261.9
5
261.6 261.1 2993196 7815.193043
09
261.6 261.2
5
265.5 257.6 260.1 259.7
5
261.07 2837816 7408.632434
09
259.7
5
260.5 263 259.0
5
260.6 260.7
5
260.47 1906831 4966.735851
09
260.7
5
260.5
5
263.5 252.4 259.3 259.2
5
260.03 5785095 15042.96081
09
259.2
5
259.2
5
262 255.7 260 260.0
5
259.54 3885451 10084.41348
09
260.0
5
261 264.3
5
258 261.9
5
263.5
9
261.39 2005337 5241.832353
09
263.5
9
262.0
5
265.4 257 257.7 258.9
5
259.46 6800388 17644.56393
09
258.9
5
259.6
5
268 257.6 266.6 266.0
5
262.47 3310926 8690.258465
09
266.0
5
266 269.7 262.2
5
268 266.6 266.98 2878839 7685.9485
09
266.6 265 271.4
5
264.6
5
269 267.5 269.18 4224981 11372.90613
113

Interpretation:-
Puts.
Open Price=228 On 1
st
June 09
Low Price=228 On 2
nd
june 09
High Price=271 On 30th june 09
Close price=267 On 30th june 09

= (228+271)/2
= 249
=228-249
=-13
114

So here margin of safety is negative value. So here investor gets more Loss and longs. Here
point
=271-249
=22
=228-249
=-13

115

HUL JUNE MONTH CALL TABLE(Strike Price=250):-
OPTSTK HINDUNILVR CA 1-Jun-09 25-Jun-09 250 2.9 2.9 192.03
OPTSTK HINDUNILVR CA 2-Jun-09 25-Jun-09 250 3 3 131.49
OPTSTK HINDUNILVR CA 25-Jun-09 25-Jun-09 250 10.95 0 20.78

116

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.

Spot price 263.5
Strike price 250.00
Amount 13.5
Net Profit 10.6*1000=10600
Buyer Profit = Rs 10600(Net Amount)
SELLERS PAY OFF:
also increases.
Strike price 263.5
Spot price 250.00
Amount -13.5
Loss -10.6*1000=-10600
Seller loss = Rs -10600(Loss)

117

HUL JUNE MONTH PUT OPTION TABLE:-

OPTSTK HINDUNILVR PA 1-Jun-09 25-Jun-09 250 21.35 20.25 0
OPTSTK HINDUNILVR PA 4-Jun-09 25-Jun-09 250 10.85 10.85 28.73
OPTSTK HINDUNILVR PA 8-Jun-09 25-Jun-09 250 9 9 57.24
OPTSTK HINDUNILVR PA 25-Jun-09 25-Jun-09 250 0.05 0 20.01
118

JUNE PUT OPTION

BUYERS PAY OFF:
On 17
th
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
So, he get loss up to Rs 18400

SELLERS PAY OFF:
total profit.

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

So, he can get profit up to Rs 18400

119

, HUL was among major gainers on the Sensex on 4
th
june 09. It was trading with volumes
of 478,620 shares. So the share value increased drastically on 4
th
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 9
th
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 10
th
june 09. Which lifted up the share value.

0
25
50
75
100
125
150
175
200
225
250
275
300
S
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P
r
i
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e

Date
HUL(June Options)Strike Price=250
Underlying Price
Call Price
Put Price
120

HUL JUNE MONTH FUTURES TABLE:-
Instru
ment
Symbol Date Expiry Ope
n
Hig
h
Low Clos
e
LTP Settle
Price
No.
of
cont
racts

Turnover
in lacs
Open Int Change in
OI
FUTS
TK
HINDUNI
LVR
1-Jun-
09
25-
Jun-09
228.
5
230
.45
227 230 230.
2
230 2560 5857.96 9537000 102000
FUTS
TK
HINDUNI
LVR
2-Jun-
09
25-
Jun-09
230 231
.3
229.
1
230.
3
230.
05
230.3 2196 5051.82 9463000 -74000
FUTS
TK
HINDUNI
LVR
3-Jun-
09
25-
Jun-09
231.
4
237
.45
230.
5
236.
15
235 236.15 4720 11042.89 9505000 42000
FUTS
TK
HINDUNI
LVR
4-Jun-
09
25-
Jun-09
236.
25
247
.45
235.
5
246.
35
246.
25
246.35 5599 13653.05 9016000 -489000
FUTS
TK
HINDUNI
LVR
5-Jun-
09
25-
Jun-09
245.
3
255 242.
5
248.
45
249.
25
248.45 4840 12053.52 8533000 -483000
FUTS
TK
HINDUNI
LVR
8-Jun-
09
25-
Jun-09
248.
2
249
.65
242.
55
248.
65
248.
7
248.65 2659 6544.39 8801000 268000
FUTS
TK
HINDUNI
LVR
9-Jun-
09
25-
Jun-09
246.
55
254
.2
246.
3
252.
95
252.
8
252.95 2624 6570.09 8955000 154000
FUTS
TK
HINDUNI
LVR
10-Jun-
09
25-
Jun-09
254 266
.65
254 261.
5
261.
25
261.5 5705 14884.37 9495000 540000
FUTS
TK
HINDUNI
LVR
11-Jun-
09
25-
Jun-09
261.
1
261
.95
255 256.
65
257.
2
256.65 2573 6637.55 8949000 -546000
FUTS
TK
HINDUNI
LVR
12-Jun-
09
25-
Jun-09
257.
2
257
.5
252.
25
255.
7
256.
5
255.7 3087 7878.33 8466000 -483000
FUTS
TK
HINDUNI
LVR
15-Jun-
09
25-
Jun-09
257.
5
262
.9
252.
5
260.
45
262.
15
260.45 2519 6500.22 8729000 263000
FUTS
TK
HINDUNI
LVR
16-Jun-
09
25-
Jun-09
260 266
.35
257.
8
264 264 264 2574 6717.66 8840000 111000
FUTS
TK
HINDUNI
LVR
17-Jun-
09
25-
Jun-09
264 264 259.
35
261.
35
261.
05
261.35 5023 13111.94 8348000 -492000
FUTS
TK
HINDUNI
LVR
18-Jun-
09
25-
Jun-09
261.
2
265
.8
258.
4
260.
6
261.
15
260.6 5677 14897.88 7856000 -492000
FUTS
TK
HINDUNI
LVR
19-Jun-
09
25-
Jun-09
260.
9
263
.8
259.
35
262.
05
261.
8
262.05 3380 8830.21 7220000 -636000
FUTS
TK
HINDUNI
LVR
22-Jun-
09
25-
Jun-09
261.
15
263
.4
257.
65
259.
65
259 259.65 4174 10881.56 5564000 -1656000
FUTS
TK
HINDUNI
LVR
23-Jun-
09
25-
Jun-09
259.
9
262
.3
255.
55
260 259.
95
260 3718 9652.07 5194000 -370000
FUTS
TK
HINDUNI
LVR
24-Jun-
09
25-
Jun-09
262.
7
264
.1
258.
25
263.
4
263.
2
263.4 2352 6145.22 4824000 -370000
FUTS
TK
HINDUNI
LVR
25-Jun-
09
25-
Jun-09
262.
9
264 258.
1
258.
9
258.
9
258.95 3328 8646.9 4046000 -778000

121

Future Market
BUYER SELLER
12/06/09(buying) 255.7 255.7
29/06/09(Closing Period) 258.95 258.95
Profit = 3.25 Loss =3.25
Profit 3.25*1000=3250 Loss 3.25*1000=3250
The closing Price of HUL at the end of contract period is 258.95 and this is considered as
settlement price.

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

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