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    © All Rights Reserved
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    7 views4 pages

    Opt Curr

    Uploaded by

    mypinklagoon8411

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 4
    nih Mi @ NSE {An investment called India CURRENC¥ yas CURRENCY OPTIONS, Corporates, Treasury and Risk Management units may consider following points before trading in carency options: Celeution of Foreign exchange excorue value and period forwhich ‘option: cover to Bek, WMessureren: of Hedge rio one degree of tk acceptable to valuation and cost aeneft analysis of currency option quotes with spot rate and tures rate PRODUCT SPECIFICATIONS errr ee Ftlones oy eurey—|raninconsacs we Ttuuatteonarey odes raeving Datpseuleen: pear eaenal pro MTE Rasaannteh enteataetnaieterent oe ‘Whe should trade in Options? Investors belonging to the following categories, depending on thei financial goals and investment objectives may conser trading hy options Investors who wan: to pascpate in he forex market without trading crholdng any curency Speculator who nave sting views on the cutrancy market and te Hedgers wine want to protect the value oftheir emitance. currency Option Hedging Strategiex ‘Currency option strategy for import transactions Purchased Cal option: On 1st August 2010, XY? buys 2 USD clloption or covering fs import ransactions, at 2 stke rate of #550, The exary date le 3 months ve 31% October 2010 The premium ls 40 pas onthe fall Gain of bss on expry at various levels of exchange ‘ate i damonstates below vise poy off able ane graph When spot exchange rate res above she str ke price there are guns tothe extent of premism paid . . 8B) Currency option strategy fr Export transactions Purchased Put option: On Ist August 2010 XYZ buys a USD Put option for covering its exper ansactions, af 2 sire rate of 4550, The exaiy dote ig months ie 21st October 2010 The premium ie 30 pas onthe Put. Gain or les on expiry at varous levels of exchange rate i= emonstates below vise payoff sable ane graph When spor exchange rate fll Below the she price, there are gens, shen frses above the sre pice there ate lsses, wich ae maximum tothe extent of premium paid (ther diferent strategies using Options Searah Sen) ouprof wren teybeveh on USD Jenssyyorm — fesonit gees eon & evn sen [roti when:uion | evn on Uso bot teen poteced ast Prof when USNR Prof when SOR sunsssurr maxpronewhens | vesertedbutsr on Pot erence seyurengecec ie baton senor [expr whens bad | ocesel outer on sevice maxprottwhers | Newari eensh on sires rote nen: ore Satu ation rn prt whe rutcaten Prone wnen: ores! Some basic terminology Cptions- ve tne ayer ne ign bro: the vblgation ether e buy sella spec fee avant of he undeving ata feed exerese pice on of Beer the {al eptons -2he righ to buy 2 secies auartty ofthe enceying a 2 fed freee price on or before the expration ete Put eptions the ight to sella speed quany of the underbying at fied ‘Option holder he person who Suys ne right conveyed by the option Option writer ~i obligates if ane when aniigned an exercise to peor aor Ings the ems ofthe option ak eerste option cle, Assigned writer = option witer ne has been asgned an eerie ekroin 36 anasignes writer Ske pice /Execse pce ~ ith pice 3: which the convact ssl ts tne bae fr determination of he amount of csh, ary thatthe option Holder Premium -Ihe price thatthe hake ofan option pays andthe writer of an onton receives forthe rights conveyed By the option (Opening Transaction: A purchase or 2 sale tanaction by which » pero ferableher or nereses 3 portion ether ashe hose or ne'er ofan option, Closing Transaction: A transaction by Which a petson reduces or cancels out previous posters ether as the hole’ the wie of ha calor Po example Sninvesar atthe same aot pr 1 exoiton may make an ofbeting alec! Sh entcal option he san opionMoldet of mate an eieing purchase of ong and short = cong refers 199 poslion asthe holder of an option Shor Expiration date - the date on which the option expres Han option nas not been exer tas exp ation cere to eat ser me exaraton Sate ve sve open hole hallo longer have any ight ang the option, no value European syle- cations neh may be exercises nly onthe exaaron cate [Ate money (TM = means that he curent maret value of the undering is rhe same asthe exereve pie ol he pan Inthe money (TM) =f call pion is ao bein the money ifthe caren’ ratte vale of ne uncaring above he eerie price of the option A put pion i et bein tne money fe current market vloe ofthe ndeng Ieelow the exereue price oe option, came: fhe cent USDINR #500, vSDINR 44.0 al re pice 8.00), {CUSDINR 48.00 put Gare rice 4500), ar In the money. ‘Out ofthe money (OTM) - call opon i sae 10 be out of the money he Cunent mart vale ofthe unaeing belo he exercise pice ofthe ation Dy pur options sid 193 out ote money he cre mare value of tne Crerbing above ecutive pece afte option fxample: he curent USDINR i 4509, USDINRA6 0 cal ike pie i 600), {LUSDINR #400 put Gre prices 4400, urare out ofthe money Insist value refects the amount ayy hi an ation in the mane For call optons chs she eference between the undying Stes pce and the strike rice For put options isthe ciference between the she price and About National Stock Exchange: “The Navona Stock Exchange NSE) nd’ lending stack exchange covering rou cles an towns acoss he county. NSE was set ua ay Teadng stuons {9 prove 9 modern filly automated scren-naes acing sytem wn naka teach. The fachange he bought about unparalleles tansprency. speed & ‘ricer, safely ana maretntegiy eno set up oc: tat serve as a model fr the recuesndustry fe of symery, acces 3 process NSE has piye a cata fle netarming the Ina secu mane nes of rrorricture, Maret pracices ane tracing volumes Tre rate tod) uses Sater feat echnalogy fo plovde an efent and arspatet adn, products & services viz. cemutualation of ace exchange goverance seen ase raging, comoression of setlemen: ces, dematealsaton and elecvonc tamer of secutes ievities nrg ane Soroning, svofenianaation of trading member, fresunes Tak management systems emergence of cl arhg

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