Project Vijay

PART A:
INDUSTRY PROFILE OF ASSET MANAGEMANT/ INVESTMENT COMPANIES
INVESTMENTS
Investment is the investing of money or capital in order to gain profitable returns, as interest,
income, or appreciation in value. It is related to saving or deferring consumption. Investment is
involved in many areas of the economy, such as business management and finance no matter for
households, firms, or governments. An investment involves the choice by an individual or an
organization such as a pension fund, after some analysis or thought, to place or lend money in a
vehicle, instrument or asset, such as property, commodity, stock, bond, financial derivatives (e.g.
futures or options), or the foreign asset denominated in foreign currency, that has certain level of
risk and provides the possibility of generating returns over a period of time.
Investments can be broadly classified into two types:
• Financial investments.
• Real investments.
FINANACIAL INVESTMENTS:
Financial investment refers to the purchasing of securities or other financial assets from the
capital market. Financial investments are in stocks, bonds, and other types of security
investments. some of the examples for financial investment are:
• Equity Shares
• Preference Shares
• Debentures
• Warrants
• Gilt Edged Securities
– Treasury Bills
– Public Sector Bonds
• National Saving Scheme – Post Office
1|Page
• Public Provident Fund
• Corporate Fixed Deposits
• Deposits with Banks
• Mutual Funds
REAL INVESTMENT
Money invested in tangible and productive assets such as plant and machinery, as opposed to
investment in securities or other financial instruments. Some of the examples of real investment
are:
• Real Estate
• Bullion
• Precious Stones
• Art Objects
EQUITY MARKET
Securities market in which common stock (ordinary shares) are traded. The US equities market,
for example, comprises of American Stock Exchange (AMEX), NASDAQ National Market, and
New York Stock Exchange (NYSE).
A stock exchange has been defined by the Securities Contract (Regulation) Act, 1956 as an
organization, association or body of individuals established for regulating, and controlling of
securities. The Indian equity market depends on three factors -
• Funding into equity from all over the world
• Corporate houses performance.
The stock market in India does business with two types of fund namely private equity fund and
venture capital fund. It also deals in transactions which are based on the two major indices -
Bombay Stock Exchange (BSE) and National Stock Exchange of India Ltd. (NSE).
2|Page
The Indian Equity Market is more popularly known as the Indian Stock Market. The Indian
equity market has become the third biggest after China and Hong Kong in the Asian region.
According to the latest report by ADB, it has a market capitalization of nearly $600 billion. As of
March 2009, the market capitalization was around $598.3 billion (Rs 30.13 lakh crore) which is
one-tenth of the combined valuation of the Asia region.
Equity market can be classified into two types they are,
• PRIMARY MARKET
• SECONDARY MARKET
INDIAN EQUITY MARKET:
At the end of Sensex YoY%change PE PBV

year
2000 3972.12 -20.65 20.28 2.89
2001 3262.33 -17.87 15.73 2.22
2002 3377.28 3.52 14.64 2.28
2003 5838.96 72.89 18.86 3.55
2004 6602.69 13.08 17.07 3.77
2005 9397.93 42.33 18.61 4.52
2006 13786.91 46.70 22.76 5.21
2007 20286.99 47.15 27.67 6.71
2008 9647.13 -52.45 12.36 2.58
2009 17464.18 81.03 22.36 4.20
2010 20,509.09 17.43 26.54 6.13
Yearly Sensex (BSE Sensitive Index) performance Source: economic times
PRIMARY MARKET:
Market for new issues of securities, as distinguished from the Secondary Market, where
previously issued securities are bought and sold.
A market is primary if the proceeds of sales go to the issuer of the securities sold
3|Page
The first group of investors to whom the new issue of security is sold. The primary market
consists of the issuer and the first buyers of the issue. All subsequent trading takes place on the
secondary market. Underwriting is the process by which the primary market functions, that is,
how issues are sold to the primary buyers. The primary market can at times be more volatile than
the secondary market because it is difficult to determine the underlying value of new issues. In
any case, the primary market accounts for only a portion of trade on a given trading day. See
also: Rights issue, preferential issue, Initial public offering.
Primary market consists of:
• IPOs: Initial Public offering; new shares offered to the public in the PRIMARY
MARKET. IPOs are sometimes preceded by very liberal bonus issues to existing
shareholders as a reward for their faith in staking money when the venture was new.
YEAR IPOs
2010 93
2009 21
2008 38
2007 112
2006 96
2005 76
• QIPs: qualified institutional placements ; A designation of a securities issue given by the

Securities and Exchange Board of India (SEBI) that allows an Indian-listed company to
raise capital from its domestic markets without the need to submit any pre-issue filings to
market regulators.
Qualified institutional placement (QIP) is a capital raising tool, primarily used in India,
whereby a listed company can issue equity shares, fully and partly convertible debentures, or any
4|Page
securities other than warrants which are convertible to equity shares to a Qualified Institutional
Buyer (QIB).
• RIGHTS ISSUE: Issue of shares at par or at a premium by an existing company to its

shareholders in a certain proportion (and additional shares, if available) to their holdings, as a
matter of their right to receive preferential treatment. An existing shareholder, instead of
subscribing to such an issue, can let his rights lapse, or renounce his rights in favour of another
person (free, or for a consideration) by signing the renunciation form. The renouncer may or may
or may not have the right to apply for shares additional to his entitlement, depending upon the
terms the company attaches to the renunciation of rights.
New stock (share) issue offered to existing stockholders (shareholders) in proportion to

their current stock/shareholding, for a specified period and at a specified (usually discounted)
price. Its objective is to afford them the opportunity to maintain their percentage of ownership of
the firm. See also scrip issue.
Amount raised (in rs crore)
Year IPO QIP RIGHTS TOTAL

2004 30,511 - 3,311 33,822
2005 22,754 - 4,387 27,141
2006 24,669 3,935 3,531 32,135
2007 45,142 23,400 14,085 82,627
2008 16,927 3,586 31,054 51,567
2009 19,547 41,577 3,626 64,750
SECONDARY MARKET:
The market where securities are traded after they are initially offered in the primary market.
Most trading is done in the secondary market.
Markets in which investors purchase securities or assets from other investors rather than directly
from the issuing companies; exchanges such as the Bombay Stock Exchange and the NSE are
secondary markets. Secondary markets also are used by mutual funds, investment banks, and
entities such as Fannie Mae to purchase mortgages from issuing lenders. In any secondary
5|Page
market trade, the cash proceeds go to an investor rather than to the underlying company or entity
directly.
Secondary market consists of:
• Individual investors
• Institutional investors
– FII
– MUTUAL FUNDS
– PRIVATE EQUITY/VENTURE CAPITAL
– PMS
– INSURANCE
Individual investors:
An individual who purchases small amounts of securities for him/herself, as opposed to an

institutional investor. Also called retail investor or small investor.
Intuitional investors:
Entity with large amounts to invest, such as investment companies, mutual funds, brokerages,
insurance companies, pension funds, investment banks and endowment funds. Institutional
investors are covered by fewer protective regulations because it is assumed that they are more
knowledgeable and better able to protect themselves. They account for a majority of overall
volume. The absence of institutional investors in a bear market can have damaging results. In
view of their often substantial holdings they can play a major role in influencing company policy
and in takeover bids. They have professional analysts and advisors, and can usually read stock
market trends much better than individual investors. With their larger holdings they are often
represented on the board of directors, and can influence company policy.
Intuitional investors can be further divided into following categories:
6|Page
FIIs: (foreign institutional investors)
An investor or investment fund that is from or registered in a country outside of the one in which
it is currently investing. Institutional investors include hedge funds, insurance companies,
pension funds and mutual funds.
It is important to point out that even when foreigners are noisy and irrational, their activity does
not necessarily have a destabilizing impact. Domestic investors may be powerful enough and the
market as a whole succinctly liquid to accommodate selling or buying pressures from noisy
foreigners. As long as domestic investors are not subject to the same imperfections that give rise
to noisy trading strategies, foreigners should have no impact on volatility. However, they find no
permanent effects of net foreign order imbalances on prices and volatility. Domestic investors
quickly accommodate large sales or purchases by foreign Investors.
As on today total Investment of FII in India is apprx 1.5 lacs Crore, after Sensex and Nifty has
corrected by whopping 12-13% in October itself, where net data shows FII were the sellers to the
tune of Rs.2500 crore.
FIIs own around 16-17 percent of firms in the Sensex
Netinvestment in marketsrs'000' crore

100
80
60
40
net investment in markets
20
rs'000' crore
0
-20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-40
-60
Source: SEBI
PRIVATE EQUITY/VENTURE CAPITAL:

7|Page
Depending upon the stage at which funding is availed of, Venture funds/PE fund can be
classified into various types:
1) Angel investors: These are typically high-net-worth individuals (HNIs) who have often been
successful entrepreneurs themselves. They re-deploy their wealth in next-generation businesses.
They invest in new-idea enterprises (that do not yet have external validation), help bring these
ideas to market, take significant risks and invest a lot of time and energy in mentoring,
management guidance and networking. Angel investors are also governed by considerations
other than finance alone, such as belief in Entrepreneurship itself.
2) Venture capital (VC) funding provides funds for early stage companies. VC investments are
traditionally made for scaling up operations (i.e. developing, launching and expanding new
products or services). VCs take lesser degree of risk and invest more money than angel investors.
However, a VC is about more than financial support alone. VCs provide entrepreneurial support
and partnership-based value-addition, often in the form of providing financial advice, human
resources, establishing networks with customers and overall guidance in company strategy.
3) Private equity players are established investment bankers and typically invest into
proven/established businesses. PE funds/players are among the largest sources of funding for
enterprises that are relatively secure with an established track record, requiring significantly
large funds for expansion and growth. As such, they take reasonably well-defined risks and their
exit strategy is usually up to the stage when the company goes public or gets acquired at high
value. PE funds are generally seen to attract huge amount of capital from investors, including
pension funds, insurance funds, university foundations and individuals. PE investors can be
domestic or foreign private equity firms. Domestic PE firms are either established as trusts, or set
up as a company. All Private equity (PE) investments from outside the country are either
classified as Foreign Institutional Investment (FII) for investments in listed companies or Foreign
Direct Investment (FDI) for investment in unlisted companies. If a PE investment takes place in
an unlisted firm, it falls under India's FDI rules. A PE fund can also buy into listed companies.
However, in order to do such investments, the PE fund has to become a registered FII.
PMS: (portfolio management services)
8|Page
The process of managing the assets of a mutual fund, including choosing and monitoring
appropriate investments and allocating funds accordingly.
PMS is meant for relatively large investors - people having a portfolio substantially larger than
the average investor. Securities and Exchange Board of India (SEBI) stipulates the minimum
investment required for a Portfolio Management Service (PMS) to be Rs. 5 Lakhs.
And this is the minimum - most large brokerage firms offering PMS have a minimum investment
limit ranging from Rs. 25 Lakhs to Rs. 1 Crore. Of course, there are some firms offering PMS for
an investment of Rs. 5 Lakhs, but these are smaller firms, and remain on the sidelines. So,
Portfolio Management Service (PMS) is meant for large investors
INSURANCE:
Insurance is a policy from a large financial institution that offers a person, company, or other
entity reimbursement or financial protection against possible future losses or damages.
The total annual premium collected by life insurance industries in last year was rs 2,21,688 crore
translated into a compounded annual growth rate (CAGR) of 23.58 per cent. The life insurance
council estimated the current financial year would close with a total premium income- renewal
and those from new sales- of rs2,55,000 crore which means a CAGR of 25.16 per cent.
LIC the biggest insurance company in India, is targeting investment of as much as Rs 50, 000
crore in equities this fiscal year
DERIVATIVES:
A derivative is a financial instrument that is derived from some other asset, index, event, value
or condition (known as the underlying asset). Rather than trade or exchange the underlying asset
9|Page
itself, derivative traders enter into an agreement to exchange cash or assets over time based on
the underlying asset. A simple example is a futures contract: an agreement to exchange the
underlying asset at a future date.
Derivatives are often highly leveraged, such that a small movement in the underlying value can
cause a large difference in the value of the derivative.
Derivatives can be used by investors to speculate and to make a profit if the value of the
underlying asset moves the way they expect (e.g. moves in a given direction, stays in or out of a
specified range, reaches a certain level). Alternatively, traders can use derivatives to hedge or
mitigate risk in the underlying, by entering into a derivative contract whose value moves in the
opposite direction to their underlying position and cancels part or all of it out.
Derivatives trading commenced in India in June 2000 after SEBI granted the final approval to
this effect in May 2001. SEBI permitted the derivative segments of two stock exchanges, NSE
and BSE, and their clearing house/corporation to commence trading and settlement in approved
derivatives contracts. To begin with, SEBI approved trading in index futures contracts based on
S&P CNX Nifty and BSE–30(Sensex) index. This was followed by approval for trading in
options based on these two indexes and options on individual securities.
The trading in BSE Sensex options commenced on June 4, 2001 and the trading in options on
individual securities commenced in July 2001. Futures contracts on individual stocks were
launched in November 2001. The derivatives trading on NSE commenced with S&P CNX Nifty
Index futures on June 12, 2000. The trading in index options commenced on June 4, 2001 and
trading in options on individual securities commenced on July 2, 2001.Single stock futures were
launched on November 9, 2001. The index futures and options contract on NSE are based on
S&P CNX.
Trading and settlement in derivative contracts is done in accordance with the rules, byelaws, and
regulations of the respective exchanges and their clearing house/corporation duly approved by
SEBI and notified in the official gazette. Foreign Institutional Investors (FIIs) are permitted to
trade in all Exchange traded derivative products.
The Participants in the derivatives market are:
10 | P a g e
a) Individuals
b) Institutions
a. Mutual Funds
b. FIIs
c. PMS
MUTUAL FUNDS PARTICPATION IN DERIVATIVES MARKET:
Following the recommendations of the Secondary Market Advisory Committee, the SEBI
decided to permit the Mutual funds to participate in the Derivatives market at par with Foreign
Institutional Investors (FII). Accordingly the Mutual funds shall be treated at par with registered
FII in respect of positions limits in Index futures, Index options, Stock options and Stock futures
contracts.
The Mutual funds will be considered as trading members like registered FIIs and the schemes of
Mutual funds will be treated as clients like sub-accounts of FIIs.This revised policy will be
applicable to all new schemes which are yet to be launched and for existing schemes, the Mutual
funds are require to obtain positive consent from the majority unit holders for participation in the
Derivatives segment while simultaneously allowing exit option to dissenting members without
any load.
Impact Analysis of Mutual funds participation in Derivative segment:
There are following possible impacts of Mutual funds participants will be on Derivatives and
Cash segment.
1. Introduction of structured product regime.
11 | P a g e
As on today the mutual funds had been offering the plain vanilla equity and debt products with
add-ons. The new guidelines are likely to facilitate the way for new regime of structured
products where the mutual funds will be able to offer hybrid of equity, debt and derivatives
products with varied features in terms of risk – reward parameters.
Some of the new product structures could be:
• Limited Loss Products:
• Hedged products
• Index based products
• Fixed Income products
2. Greater opportunity for Retail Investors to avail advantage in Derivatives:

The retail investors will have even more options to choose between various options. It is
expected to benefit the retail investors of Derivatives in the same way as the retail investor of
equity. The investors will get a chance to diversify their derivatives portfolio with much lesser
investment than otherwise in the form of margin money require in direct derivatives segment.
Moreover portfolio will be in the hands of professionals, which will reduce the unsystematic
risks.
3. Greater liquidity and market depth:
Mutual funds are now eligible to take positions in directional bets and not just hedging. By
considering various position limits as specified by SEBI, it is likely to add liquidity of Rs.
75000Crore per month which will fuel Derivatives segment activity and Dependence of FII on
Derivatives segment can be reduce by greater extend. Currently derivatives segment seems to be
underutilized and the open positions are skewed towards the near month contracts. As a result the
derivatives segment is yet to reap benefits of numerous strategies particularly the time spread
strategies.
The infusion of liquidity will encourage trading in lower maturities in both futures and options
with relatively lesser impact cost. This will not only improve the market structure but will also
open room for applications of more complex strategies, which generally fall within the purview
12 | P a g e
of institutional trade.
4. Improved Pricing Efficiency
As we know that higher liquidity and greater number of institutional players will improve the
pricing efficiency as this will lead to enhanced market making which is currently not present in
middle and far month contracts. After the permission to Mutual funds to trade in Derivatives
segment options segment will be major beneficiary as market making institution will reduce the
bid ask spreads in all the maturations. This will be a boon for retail investors who will get more
opportunity for investment in options.
5. Decline in arbitrage opportunities
Efficient market making will lead to greater pricing efficiency. This will shrink the spread
between the spot and the derivatives segment, which will virtually eliminate the arbitrage
opportunities between the two.
Hence this may prove tough for the arbitrageurs and the arbitrage mutual funds. However
liquidity in options across the entire horizontal (price) and vertical (time) spectrum may give rise
to synthetic and cross arbitrage opportunities.
Conclusion:
Thus it is to be conclude that by permitting Mutual funds to trade in Derivatives segment will not
only benefit retail investors to hedge their positions without directly burning their fingers in
highly volatile and risky Derivatives segment but other players like HNI and FII will also benefit
due to much needed liquidity in Derivatives segment. Finally only time will tell the success and
failures of Mutual funds trading in derivatives market till that period of time everyone will
eagerly watch the whole drama which is about to unveil for a bright future of Derivatives from
Mutual funds side.
13 | P a g e
FOREIGN INSTITUTIONAL INVESTORS (FIIs) PARTICIPATION IN DERIVATIVES
MARKET
– Equity Derivatives in FIIs

Till January 2002, applicable SEBI & RBI Guidelines permitted FIIs to trade only in
index futures contracts on NSE & BSE. It is only since 4 February 200212 that RBI has
permitted (as a sequel to SEBI permission in December 2001) FIIs to trade in all exchange traded
derivatives contracts within the position limits for trading of FIIs and their sub−
accounts. [These open position limits have been spelt out in SEBI circular dated 12 February
200213.] With the enabling regulatory framework available to FIIs from February 2002, their
activity in the exchange traded equity derivatives market in India should increase noticeably in
the emerging future. Evidently, several FIIs are still in the process of completing the process
of their internal approvals for use of exchange traded equity derivatives on the NSE or BSE.
Perhaps, the two years of successful track record of the NSE in managing the systemic risk
associated with its futures and options (F&O) segment would also pave way for greater FII
activity in the equity derivatives market in India in the emerging future.
Tax Issues in Equity Derivatives for FIIs:
Two crucial tax issues arise in use of equity derivatives by FIIs:
i. Tax character of profit or gain from equity derivatives contract − is it businessincome or

capital gains, and if business income, is it speculative business income or non−speculative
business income;
14 | P a g e
ii. Applicability or otherwise of withholding tax on profits from equity derivatives contracts.
Fixed Income Derivatives in FIIs
Since May 2000, FIIs are permitted to invest in domestic sovereign or corporate debt market
under the 100% debt route subject to an overall cap under the external commercial borrowing
(ECB) category, with individual sub−ceilings allocated by SEBI to each FII or sub−accounts.
FIIs are also permitted to enter into foreign exchange derivative contracts (including currency
swaps & CCIRS) by RBI16 to hedge the currency and interest rate risk to the extent of market
value of their debt investment under the 100% debt route. However, investment by FIIs in the
domestic sovereign or corporate debt market has been negligible till now. Perhaps, the spread
between fully hedge rupee cost of funds for an FII and the return on investment in India
sovereign securities or top rated domestic corporate debt securities is too thin to be attractive. In
fact, the spread could turn negative after payment of Indian taxes (20% under domestic law, 10%
to 15% under some double tax avoidance treaties) applicable on interest earned in India by FIIs.
Therefore, FII activity in the domestic fixed income derivatives market has been largely absent.
Foreign Currency Derivatives in FIIs
Equity investing FIIs leave their foreign currency risk largely unhedged since they believe that
the currency risk can be readily absorbed by the expected returns on equity investments, barring
in periods of unforeseen volatility (such as the far eastern crisis). And, as indicated in at section
5.1 above, FII investment in the domestic sovereign and corporate debt market has been
negligible. Consequently, FII activity in the foreign currency derivatives market in India has also
been negligible till now.
15 | P a g e
CONCLUDING REMARKS
Derivative markets in equities, fixed income, and foreign currency are at their nascent stage of
evolution in India, but have significant growth potential. For this potential to be realized, as
discussed in the foregoing sections 2 to 6, one or more of the following issues or impediments
would have to be overcome and resolved:
i. The regulatory framework applicable to the respective derivative markets and participants
would need to evolve further;
ii. The technological and business process framework of several key participants in these markets
needs to readied to manage the risks relating their activity in the derivatives market;
iii. The human resources/talent of several key participants in these markets needs to be vastly
upgraded and readied to manage the exposures and risks relating their activity in the derivatives
market;
iv. A framework which (a) relieves managements of public sector banks and FIs of the risk of
being held accountable for bonafide trading losses in the derivatives book and being exposed to
subsequent onerous investigative reviews; (b) but concomitantly holds managements of public
sector banks and FIs accountabe for lost opportunity profit, needs to be ushered in; and
v. The senior and top management of several key participants needs to undergo an orientation
phase to familiarize themselves with the conceptual underpinnings and microstructure of these
derivatives markets to help them establish an appropriate governance framework for the
derivatives market activity of the participant; and
16 | P a g e
2. COMPANY PROFILE
2.1 Background and inception of the company:

Originally incorporated on October 18, 1995 as Probity Research and Services Private
Limited at Mumbai under the Companies Act, 1956 with Registration No.1193797. They
commenced their operations as an independent provider of information, analysis and research
covering Indian businesses, financial markets and economy, to institutional customers.
They became a public limited company on April 28, 2000 and the name of the Company
was changed to Probity Research and Services Limited. The name of the Company was changed
to India Infoline.com Limited on May 23, 2000 and later to India Infoline Limited on March 23,
2001.
In 1999, they identified the potential of the Internet to cater to a mass retail segment and
transformed our business model from providing information services to institutional customers to
retail customers. Hence launched Internet portal, www.indiainfoline.com in May 1999 and
started providing news and market information, independent research, interviews with business
leaders and other specialized features.
In May 2000, the name of our Company was changed to India Infoline.com Limited to
reflect the transformation of our business. Over a period of time , have emerged as one of the
leading business and financial information services provider in India.
In the year 2000, they leveraged their position as a provider of Financial information and
analysis by diversifying into transactional services, primarily for online trading in shares and
securities and online as well as offline distribution of personal financial products, like mutual
funds and RBI Bonds. These activities were carried on by their wholly owned subsidiaries.
17 | P a g e
Their broking services was launched under the brand name of 5paisa.com through our
subsidiary, India Infoline Securities Private Limited and www.5paisa.com, the e-broking portal,
was launched for online trading in July 2000. It combined competitive brokerage rates and
research, supported by Internet technology besides investment advice from an experienced team
of research analysts, they also offer real time stock quotes, market news and price charts with
multiple tools for technical analysis.
2.2 Nature of the business carried

Are one-stop financial services shop, most respected for quality of its advice,
personalized service and cutting-edge technology.
India Infoline Group

The India Infoline group, comprising the holding company, India Infoline Limited and its
wholly-owned subsidiaries, straddle the entire financial services space with offerings ranging
from Equity research, Equities and derivatives trading, Commodities trading, Portfolio
Management Services Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small
savings instruments to loan products and Investment banking. India Infoline also owns and
manages the websites www.indiainfoline.com and www.5paisa.com
2.3 Vision
To be the most respected company in the financial services space
2.4 Products/service profile

India Infoline Ltd
India Infoline Limited is listed on both the leading stock exchanges in India, viz. the
Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member
of both the exchanges. It is engaged in the businesses of Equities broking, Wealth Advisory
Services and Portfolio Management Services. It offers broking services in the Cash and
Derivatives segments of the NSE as well as the Cash segment of the BSE. It is registered with
NSDL as well as CDSL as a depository participant, providing a one-stop solution for clients
18 | P a g e
trading in the equities market. It has recently launched its Investment banking and Institutional
Broking business.
A SEBI authorized Portfolio Manager; it offers Portfolio Management Services to clients.

These services are offered to clients as different schemes, which are based on differing
investment strategies made to reflect the varied risk-return preferences of clients.
India Infoline Investment Services Limited
19 | P a g e
Consolidated shareholdings of all the subsidiary companies engaged in loans and
financing activities under one subsidiary. Recently, Orient Global, a Singapore-based investment
institution invested USD 76.7 million for a 22.5% stake in India Infoline Investment Services.
This will help focused expansion and capital raising in the said subsidiaries for various lending
businesses like loans against securities, SME financing, distribution of retail loan products,
consumer finance business and housing finance business. India Infoline Investment Services
Private Limited consists of the following step-down subsidiaries.
2.5 AREA OF OPERATION

The company has global presences. It has established its branch in various nations like
China, Brazil, Dubai, Russia, Singapore, UK, USA.
2.6 Ownership patterns

The ownership pattern of the company is shown in the below table
Foreign 27.60%
Institutions 20.40%
Non promoters corporate holders 04.10%
Promoters 33.80%
Public sector 14.02%
Total 100%
2.7 Competitors information

The company has hundreds of competitors. The major competitors for the company are
• Mothilal oswal • India bulls
• Ez trade • Share khan
• Kotak securities • Religare
• Karvy • Way to wealth
These are the major competators in the financial market for India Infoline Ltd.
Compitators in the financial market are giving the competition in the aspect of brokerage rate
provided for the investors. And it varies from one company to another company and the
minimum brokerages will be fixed by the SEBI, which is applicable for all the stock brokers.
20 | P a g e
2.9 ACHIEVEMENTS/AWARD
• 1995:Incorporated as an equity research and consulting firm with a client base that
included leading FIIs, banks, consulting firms and corporate.
• 1999: Restructured the business model to embrace the internet; mobilized capital from
reputed private equity investors.
• 2000: Commenced the distribution of personal financial products; launched online equity
trading; entered life insurance distribution as a corporate agent. Acknowledged by
Forbes as ‘Best of Web’ and ‘…must read for investors’.
• 2004: Acquired commodities broking license; launched portfolio management service
• 2005: Listed on the Indian stock markets.
• 2006: Acquired membership of DGCX; launched investment banking services
• 2007: launched a property trading platform ; introduced an institution equities team;
formed a Singapore subsidiary; raised over USD 300 mn in the group; launched
consumer finance business under the money line brand
• 2008: launched wealth management services under the IIFL wealth brand setup India
Infoline private equity fund; received the insurance Broking the venture capital license
from IRDA received the venture capital license; received in principal approval to
sponsor a mutual fund; received best broker India award from finance Asia; most
improved broking India award from Asiamoney.
• 2009: received registration for a housing finance company from the national housing
bank; received faster growing equity broking house- large firms in India by dun &
bradstreet
• 2010: IIFL securities pvt. Ltd. (singapore), received in-principle approval from the
singapore stock exchange, iifl securities ceylon (pvt) ltd. Sri lanka), received in-principle
approval for membership of the colombo stock exchange for stock broking.
2.10 Work flow model

The company’s workflow model may be considered under two headings one s buy and
another is sell.
21 | P a g e
Under buy the workflow is model s as under
The cheque will be accepted then it will be deposited into d-mat account. Then the
amount will be transferred to trading account. Then the order for the purchase of securities will
be made with the amount available by quoting the price per share and the quantity. After the
shares purchased automatically the amount will be credited from the account. After settlement is
over the shares will transferred to d-mat account.
Under sell- the work flow model is as under

When the investor wants to sell his securities then the sales order will be placed by
quoting the selling price per share and the quantity that has to be sold. After the shares sold
automatically the amount will be debited to the account and if the investor wants he can invest
again or the amount can be transferred to his bank account which the investor prefers.
2.11 Future growth and prospects

The asset base will continue to grow at an annual rate of about 30 to 35 % over the next
few years as investor’s shift their assets from banks and other traditional avenues. Some of the
older public and private sector players will either close shop or be taken over.
Out of ten public sector players five will sell out, close down or merge with stronger
players in three to four years. In the private sector this trend has already started with two mergers
and one takeover. Here too some of them will down their shutters in the near future to come.
But this does not mean there is no room for other players. The market will witness a
flurry of new players entering the arena. There will be a large number of offers from various
22 | P a g e
asset management companies in the time to come. Some big names like Fidelity, Principal, Old
Mutual etc. are looking at Indian market seriously. One important reason for it is that most major
players already have presence here and hence these big names would hardly like to get left
behind.
3. Mckensy’s 7s frame work with special reference to organization under

study.
Structure
Strategy Systems
Shared
Values
Skills Style
23 | P a g e
Staff
McKinsey’s company, a very well known management consultancy in USA, developed
the McKinsey’s Framework by undertaking research studies of successful MNCs around the
world . According to them a successful company exhibited proper coordination of seven S the
model as specified in the above figure. All companies studied had seven elements which lead to
the success of the company. The first three elements termed as the hardware of success includes,
STRATEGY, SYSTEM and STRUCTURE. The next four elements are STYLE, STAFF,
SKILLS and SHARED VALUE is considered as the software of success.
The model starts on the premise that an organization is not just Structure, but consists of
7 elements with a complex relationship & coherence between them.
4. SWOT Analysis
SWOT Analysis, is a strategic planning tool used to evaluate the Strengths, Weaknesses,
Opportunities and Threats involved in a project or in a business venture. It involves specifying
the Objective of the business venture or project and identifying the internal and external factors
that are favorable and unfavorable to achieving that objective.
The aim of any SWOT analysis is to identify the key internal and external factors that are
important to achieving the objective. SWOT analysis groups key pieces of information into two
main Categories:
• Internal factors - The strengths and weaknesses internal to the organization.
24 | P a g e
• External factors - The opportunities and threats presented by the external environment.
The internal factors may be viewed as strengths or weaknesses depending upon their
impact on the Organizations objectives. What may represent strengths with respect to one
objective may be Weaknesses for another objective. The factors may include all of the 4Ps; as
well as personnel, Finance, manufacturing capabilities, and so on. The external factors may
include macroeconomic Matters, technological change, legislation, and socio-cultural changes,
as well as changes in the Marketplace or competitive position. The results are often presented in
the form of a matrix.
SWOT Analysis is used

• To capitalize on the strategies of the company.
• To overcome the weakness of the company.
• To exploit the full opportunities available in the environment.
• To manage successfully the threats passed by the internal & external environment
4.1 Strengths
• Access to the group’s vast distribution network facilitates a pan-India reach
• Leveraging the group’s client base facilities faster and cheaper (compared with industry
average business expansion)
• Multiple loan application checks and a strong ensure minimal delinquency
• Sizeable business volumes from referrals reflects quality assets
4.2 Weakness
• Not able to concentrate more on small investors
• not able to study the stock market accurately
4.3 OPPORTUNITY
• An opportunity for expansion of the business globally.
25 | P a g e
• An opportunity for the company to attract more number of customers.
4.4 THREATS
• Competition
• Labour turnover
5. ANALYSIS OF FINANCIAL STATEMENT
26 | P a g e
27 | P a g e
6. LEARNING EXPERIENCE
28 | P a g e
The in-plant training at Indiainfoline was a value based experience under the guidance
and kindly support of the technical, finance, business planning managers. The training was very
helpful and knowledge based as it gave a picture as to the corporate functioning of the company.
The environment within the company was friendly. Here are of my experience during my visit to
the company.
It has been almost 15 year since its inception and the organization is already showing a
growth of 100% in its area of operation which is a very good sign for the organization, as I was
there with this organization for 6 weeks I got the opportunity to experience the business
intricacies first hand, & I also had a chance to observe how the organization operates.
In total this was a very knowledgeable experience which I am sure will help me a lot as I
enter the corporate world after getting my MBA. The theoretical aspects that we learn in our
class rooms were being put test throughout the in plant training, after all this enchanting
experience I believe that I have learnt a lot about the corporate world and it has changed me for
better.
29 | P a g e
30 | P a g e
Part B
OPTION STRATEGIES ON NIFTY
I. General Introduction
i. Statement of the Problem
Derivatives were developed to be used as Hedging tools. Many speculators and arbitrageurs use
derivatives to make profits. Derivative strategies can be structured to give high return with a
lower risk. Derivatives mainly include futures and options. This study chiefly focuses on
analyzing Basic and Advanced Option Strategies and tries to understand whether these option
strategies can be implemented in order to maximize returns.
ii. Objectives of the Study
• To understand the use and benefits of derivatives with special emphasis on options
• To analyze three scenarios viz., maximum profit, maximum loss and breakeven point of
basic and advanced option strategies
• To identify strategies which can be implemented in various market scenarios viz., bull
market, bear market, volatile market and stable market
• To do a market study to understand the transaction costs involved in options
iii. Scope of the Study
• Four Basic Option strategies are Long Call, Long Put, Short Call and Short Put. These
strategies are evaluated to find maximum profit, maximum loss and breakeven point.
• Analyzing in detail Advanced Option strategies such as Spreads, further classified into
Horizontal, Vertical and Diagonal Spreads
• Analyzing the use of spreads in bull market and bear market situations
31 | P a g e
• Analyzing in detail Advanced Option strategies such as straddles, strangles, strips and
straps
• Analyzing the use of straddles, strangles, strips and straps in volatile and stable market
situations documentary
iv. Methodology of Study
• Using past Nifty data, each option strategy basic and advanced will be evaluated
• For each strategy a table is prepared with details of Maximum loss, maximum profit and
breakeven point/points.
• For each strategy a graph is prepared depicting the Maximum loss, maximum profit and
breakeven point/points.
• Meeting brokers to understand the transaction costs in options
v. Limitations of the Study
• The study does not involve analysis of Geeks viz., Delta, Theta, Gamma, Vega and Rho
for each of the option strategies
• The study does not test the efficacy of each strategy over a long period such as 5 years of
Nifty. Any strategy ideally should be implementing after back testing for at least 5 years.
II. Analysis/ Design/ Findings/ Observations of the Project
Important terminology
Option
32 | P a g e
An option is a contract between a buyer and a seller that gives the buyer the right, but not the
obligation, to buy or to sell a particular asset (the underlying asset) on or before the option's
expiration time, at an agreed price, the strike price.
Call option
A call option gives the buyer the right to buy the underlying asset
Put option
A put option gives the buyer of the option the right to sell the underlying asset.
In the money option
A call option is in-the-money when the underlying price is higher than the option’s exercise
price.
A put option is in-the-money when the underlying price is lower than the option’s
Exercise price.
At the money option
An option is at-the-money when the underlying price is equal to the option’s exercise price. In
practice the option with the exercise price nearest to the prevailing underlying price is called the
at-the-money option.
Out of money option
33 | P a g e
A call option is out-of-the-money when the underlying price is lower than the option’s exercise
price.
A put option is out-of-the-money when the underlying price is higher than the
Option’s exercise price.
Strike price
The fixed price at which the owner of an option can purchase, in the case of a call,
or sell, in the case of a put, the underlying security or commodity. It's the price at
which the stock will be bought or sold when the option is exercised.
The strike price is often called the exercise price.
American option
A legally binding agreement that confers the right, but not the obligation, to the holder to buy or
sell an underlying asset at a price agreed now by a specified expiry date in the future.
European option
A legally binding agreement that confers the right, but not the obligation, to the holder to buy or
sell an underlying asset at a price agreed now on a specified expiry date in the future.
Option premium
Option premium refers to the per-share amount that a buyer pays for an option - for the right to
buy/"call" or sell/"put" a security at a specified price in the future. An option premium is a
nonrefundable, full payment (not a down payment) for the rights specified in the stock option
contract. One pays an option premium regardless of whether or not the option is actually
exercised. The option premium often changes, due to fluctuating market conditions and
economic variables. An option premium is therefore determined by several factors. The main
thing affecting the option premium is the difference between the stock price and the strike price,
which is the specified future price. Additional primary factors affecting the option premium
34 | P a g e
include the time remaining for the option to be exercised and the volatility of the underlying
stock.
Intrinsic value
The intrinsic value of an option is the amount an option holder can realise by exercising the
option immediately. Intrinsic value is always positive or zero. An out-of-the-money option has
zero intrinsic value.
Intrinsic value of in-the-money call option = underlying product price - strike price
Intrinsic value of in-the-money put option = strike price - underlying product price
Time value
The time value of an option is the value over and above intrinsic value that the market
Places on the option. It can be considered as the value of the continuing exposure to the
Movement in the underlying product price that the option provides. The price that the
Market puts on this time value depends on a number of factors: time to expiry, volatility of the
underlying product price, risk free interest rates and expected dividends.
Option Greeks
The Greeks are the quantities representing the sensitivities of derivatives such as options to a
change in underlying parameters on which the value of an instrument or portfolio of financial
instruments is dependent. The name is used because the most common of these sensitivities are
often denoted by Greek letters. Collectively these have also been called the risk sensitivities,
risk measures or hedge parameters.
Delta: measures the change in the option price for a given change in the price of the
Underlying and thus enables exposure to the underlying to be determined. The delta is
Between 0 and +1 for calls and between 0 and -1 for puts (thus a call option with a delta of 0.5
will increase in price by 1 tick for every 2 tick increase in the underlying).
35 | P a g e
Gamma: measures the change in delta for a given change in the underlying. (e.g. if a call option
has a delta of 0.5 and a gamma of 0.05, this indicates that the new delta will be 0.55 if the
underlying price moves up by one full point and 0.45 if the underlying price moves down by one
full point).
Theta: measures the effect of time decay on an option. As time passes, options will lose
Time value and the theta indicates the extent of this decay. Both call and put options are wasting
assets and therefore have a negative theta. Note that the decay of options is nonlinear in that the
rate of decay will accelerate as the option approaches expiry. As the table below illustrates, the
theta will reach its highest value immediately before expiry.
Vega: measures the effect that a change in implied volatility has on an option’s price. Both calls
and puts will tend to increase in value as volatility increases, as this raises the Probability that the
option will move in-the-money. Both calls and puts will thus possess a positive Vega.
Rho: The dollar amount that the price of an option or other derivative changes for each 100 basis
points the risk-free interest rate changes. This is a measure of the option’s or derivative's
responsiveness to interest rates.
36 | P a g e
Basic option strategies
Long call
Figure 1.1
The trade: Buy a call with an exercise price of (A).

Market expectation: Market bullish/volatility bullish. The more bullish the expectation, the
further out-of-the-money (higher strike) the purchased call should be. A Long Call combines
limited downside exposure with high gearing in a rising market.
Profit and loss characteristics at expiry:

Profit: Unlimited in a rising market.
37 | P a g e
Loss: Limited to the initial premium.
Break-even: Reached when the underlying rises above the strike price A, by the same
amount as the premium paid to establish the position.
Short call
Figure 1.2
The trade: Sell a call (A).

Market expectation: Market bearish/volatility bearish. Holder expects a gradual fall in
the market and lower volatility. The optimal strike is dependent on time decay and Vega
Level; although, in general, the more bearish the expectation, the greater the sold option should
be in-the-money (lower strike) in order to maximize premium income. Profit is limited to the
premium received and thus if the market view is more than moderately bearish, a Long Put may
yield higher profits.
Profit & loss characteristics at expiry:

Profit: Limited to the premium received from selling the call.
Loss: Unlimited in a rising market.
38 | P a g e
Break-even: reached when the underlying rises above the strike price A, by the same
amount as the premium received from selling the call.
Long put
Figure 1.3
The trade: Buy a put (A).

Market expectation: Market bearish/volatility bullish. The more bearish the expectation, the
further out-of-the-money (lower strike) the purchased put should be. A Long Put
Combines limited upside exposure with high gearing in a falling market.

Profit: Effectively unlimited in a falling market.
Loss: Limited to the initial premium paid.
Break-even: Reached when the underlying falls below the strike price A by the same
amount as the premium paid to establish the position.
39 | P a g e
Short put
Figure 1.4
The trade: Sell a put (A).

Market expectation: Market bullish/volatility bearish. Holder expects a gradual rise in the
market with lower volatility. The optimal strike to be sold will be dependent on time decay and
the Vega level, although in general, the more bullish the view, the greater the sold option should
be in-the-money (higher strike) in order to maximise premium income. Profit is limited to the
premium received and thus if the market view is more than moderately bullish, a long call may
yield higher profits.

Profit: Limited to the premium received from selling the put.
Loss: Unlimited in a falling market.
Break-even: Reached when the underlying falls below the strike price A by the same amount as
the premium received from selling the put.
40 | P a g e
Advance option strategies
Long call spread:
Figure 1.5
The trade: Buy a call (A), sell call at higher strike (B).
Market expectation: Market bullish/volatility neutral. The spread has the advantage of
being cheaper to establish than the purchase of a single call, as the premium received from
the sold call reduces the overall cost. The spread offers a limited profit potential if the
underlying rises and a limited loss if the underlying falls.

Profit: Limited to the difference between the two strikes minus net premium cost. Maximum
profit occurs where the underlying rises to the level of the higher strike B or above.
Loss: Limited to any initial premium paid in establishing the position. Maximum loss occurs
where the underlying falls to the level of the lower strike A or below.
Break-even: Reached when the underlying is above strike A by the same amount as the net
cost of establishing the position.
Short put spread
41 | P a g e
Figure 1.6
The trade: Sell a put (B), buy put at a lower strike (A).
Market expectation: Market bullish/volatility neutral. The Short Put at B aims to take
advantage of a bullish market and the premium gained affords some downside protection
with a Long Put at A. The spread offers a limited profit potential if the underlying rises and a
limited loss if the underlying falls.

Profit: Limited to the net premium credit. Maximum profit occurs where underlying rises to
the level of the higher strike B or above.
Loss: Maximum loss occurs where the underlying falls to the level of the lower strike A or
below.
Break-even: Reached when the underlying is below strike B by the same amount as the net
credit of establishing the position.
Long call spread:
42 | P a g e
Figure 1.7
The trade: Sell a call (A), buy call at higher strike (B).
Market expectation: Market bearish/volatility neutral. The Short Call at A aims to take
advantage of a bearish market and the premium gained affords some upside protection
with a Long Call at B. The spread offers a limited profit if the underlying falls and a limited
loss exposure if the underlying rises.

Profit: Limited to the net premium credit. Maximum profit occurs where underlying falls to
the level of the lower strike A or below.
Loss: Limited to the difference between the two strikes minus the net credit received in
establishing the position. Maximum loss occurs where the underlying rises to the level of
the higher strike B or above.
Break-even: Reached when the underlying is above strike price A by the same amount as
the net credit of establishing the position.
Long put spread:
43 | P a g e
Figure 1.8
The trade: Buy a put (B), sell put at lower strike (A).
Market expectation: Market bearish/volatility neutral. The spread has the advantage of
being cheaper to establish than the purchase of a single put, as the premium received from
the sold put reduces the overall cost. The spread offers a limited loss exposure if the
underlying rises, and a limited profit if the underlying falls.

profit occurs where underlying falls to the level of the lower strike A or below.
Loss: Limited to the initial premium paid in establishing the position. Maximum loss occurs
where the underlying rises to the level of the higher strike B or above.
Break-even: Reached when the underlying is below strike price B by the same amount as
the net cost of establishing the position.
Long combo:
44 | P a g e
Figure 1.9
The trade: Sell a call (B), buy put at lower strike (A).
Has same profile as synthetic split strike short future.
Market expectation: Market bearish/volatility neutral. The risk/reward profile is similar to
that of a short future except that there is a plateau (A-B) over which there will be no change
in profit/loss. The plateau makes this a more suitable trade than a short future if volatility
expectations are uncertain.

Profit: Unlimited in a falling market.
Break-even: Depending on the strikes chosen, the position may yield a small premium cost
or credit. If the position is established at a net cost, break-even will occur where the market
falls below point A by the same amount. If the position is established at a credit, break-even
will occur where the market rises above point B by the same amount.
Short combo:
45 | P a g e
Figure 1.10
The trade: Buy a call (B), sell put at lower strike (A).
Same profile as synthetic split strike long future.
Market expectation: Market bullish/volatility neutral. The risk/reward profile is similar to
that of a long future except that there is a plateau (A-B) in which there is no change in
profit/loss. The plateau makes this a more suitable trade than a long future if volatility
expectations are uncertain.

Break-even: Depending on the strikes chosen, establishing the position may yield a small
premium cost or credit. If the position is created at a cost, break-even will occur where the
market rises above point B by this amount. If the position is established at a credit, the
break-even point will occur if the market falls below point A by the same amount.
Long straddle:
46 | P a g e
Figure 1.11
The trade: Buy a put (A), buy call at same strike.

Market expectation: Market neutral/volatility bullish. With the underlying at A and an
unknown directional move or increase in volatility is anticipated.

Profit: Unlimited for an increase or decrease in the underlying.
Loss: Limited to the premium paid in establishing the position. Will be greatest if the
underlying is at strike A, at expiry.
Break-even: Reached if the underlying rises or falls from strike A by the same amount as
the premium cost of establishing the position.
Short straddle:
47 | P a g e
Figure 1.12
The trade: Sell a put (A), sell call at same strike.

Market expectation: Market neutral/volatility bearish. With the underlying at A and a period
of low or decreasing volatility is anticipated, and the underlying is not expected to move
dramatically.

Profit: Limited to the credit received from establishing the position. Highest if the market
settles at A.
Loss: Unlimited for both an increase or decrease in the underlying.
Break-even: Reached if the underlying rises or falls from strike A by the same amount as
the premium received from establishing the position.
Long strangle:
48 | P a g e
Figure 1.13
The trade: Buy a put (A), buy a call at higher strike (B).
Market expectation: Market neutral/volatility bullish. The holder expects a major
movement in the market but is unsure as to its direction. A larger directional move is needed
than a straddle in order to yield a profit but if the market stagnates, losses will be less.

Profit: The profit potential is unlimited although a substantial directional movement is
necessary to yield a profit for both a rise or fall in the underlying.
Loss: Occurs if the market is static; limited to the premium paid in establishing the position.
Break-even: Occurs if the market rises above the higher strike price at B by an amount
equal to the cost of establishing the position, or if the market falls below the lower strike
price at A by the amount equal to the cost of establishing the position.
Short strangle:
49 | P a g e
Figure 1.14
The trade: Sell a put (A), sell call at higher strike (B).
Market expectation: Direction neutral/volatility bearish. The holder expects low volatility
and no major directional move. More cautious than a straddle as profit potential spans a
larger range although maximum potential profits will be lower.

Profit: Limited to the premium received. Will be highest if the underlying remains within the
market level A-B.
Loss: Unlimited for a sharp move in the underlying in either direction.
Break-even: reached if the underlying falls below strike A or rises above strike B by the
same amount as the premium received in establishing the position.
Long guts
50 | P a g e
Figure 1.15
The trade: Buy a call (A), buy put at higher strike (B).
Market expectation: Market neutral/volatility bullish. The market is at, or about the A-B
range and a large directional move in the underlying is anticipated. Position has
characteristics comparable to an in-the-money strangle.

Profit: Unlimited in a rising or falling market. A substantial directional movement is required
however.
Loss: Limited to the initial premium paid less the difference between A and B; occurs if the
underlying remains within the range A-B.
Break-even: Reached if the underlying rises above the higher strike price B by the amount
equal to the cost of establishing the position less A-B, or if the underlying falls below the
lower strike price A by the amount equal to the cost of establishing the position less A-B.
Long butterfly:
51 | P a g e
Figure 1.16
The trade: Buy put (or call) A, sell two puts (or calls) at higher strike B, buy put (or call) at an
even higher strike C.
Market expectation: Direction neutral/volatility bearish. In this case, the holder expects the
underlying to remain around strike B, or it is felt that there will be a fall in implied volatility.
Position is less risky than selling straddles or strangles as there is a limited downside exposure.

Profit: Maximum profit limited to the difference in strikes between A and B minus the net
cost of establishing the position. Maximised at mid strike B (assuming A-B and B-C are
equal).
Loss: Maximum loss limited to the net cost of the position for either a rise or a fall in the
underlying.
Break-even: Reached when the underlying is higher than A or lower than C by the cost of
establishing the position.
Long butterfly:
52 | P a g e
Figure 1.17
The trade: Buy put (or call) A, sell two puts (or calls) at higher strike B, buy put (or call) at an
even higher strike C.
Market expectation: Direction neutral/volatility bearish. In this case, the holder expects the
underlying to remain around strike B, or it is felt that there will be a fall in implied volatility.
Position is less risky than selling straddles or strangles as there is a limited downside exposure.

Profit: Maximum profit limited to the difference in strikes between A and B minus the net
cost of establishing the position. Maximised at mid strike B (assuming A-B and B-C are
equal).
Loss: Maximum loss limited to the net cost of the position for either a rise or a fall in the
underlying.
Break-even: Reached when the underlying is higher than A or lower than C by the cost of
Short butterfly:
53 | P a g e
Figure 1.18
The trade: Sell put (or call) A, buy two puts (or calls) B, sell put (or call) C.
Market expectation: Market neutral/volatility bullish. In this case the holder expects a
directional move in the underlying, or a rise in implied volatility.

Profit: Maximum profit is the net credit received in establishing the position and will occur if
there is a sufficient directional move of the underlying, in either direction.
Loss: Limited to the difference in strikes between A and B, minus the net credit in
Break-even: Reached when the underlying is higher than A or lower than C by the credit
received from establishing the position.
Long condor:
54 | P a g e
Figure 1.19
The trade: Buy put (call) at A; sell put (call) at two higher strikes B, C; buy put (call) at yet
higher strike D.
Market expectation: Direction neutral/volatility bearish. A Long Condor allows for a greater
degree of volatility and hence a wider band of profit potential than a Long Butterfly.

Profit: Maximised where the underlying settles between the two strike prices B and C, but
will decline as the market rises, or falls beyond these strikes.
Loss: Occurs if the underlying rises towards strike D or falls towards strike A. Will be limited
to the cost of establishing the position for either a rise or a fall in the underlying.
Break-even: Lower break-even point reached when underlying reaches the lower strike
price A plus the cost of establishing the spread, and the higher break-even when the
underlying reaches the level of the higher strike D minus the cost of establishing the spread.
Short condor:
55 | P a g e
Figure 1.20
The trade: Sell put (call) at A; buy put (call) at two higher strikes B, C; sell put (call) at yet
higher
strike D.
Market Expectation: Direction neutral/volatility bullish. Holder expects the market to move
significantly, or volatility to rise, but the direction is uncertain. A Short Condor will require a
larger directional move than a butterfly in order to yield a profit.
Profit: Limited and will occur if the market moves above the highest strike (D) or below the
lower strike at A.
Loss: Maximum losses are limited and will occur if the market remains between the exercise
prices B and C.
Break-even: Lower break even reached when underlying reaches the lower strike price A plus
the net credit received from establishing the position, and the higher breakeven when the
underlying reaches the level of the higher strike price D minus the credit received from
Long box:
56 | P a g e
Figure 1.21
The trade: Buy a call and sell a put, buy a put and sell a call and at a higher strike. All four
options should have the same expiry date.
Market expectation: Direction neutral/volatility neutral. This is a 'locked trade', and hence
its value is wholly independent of the price of the underlying. Where the synthetic long
underlying price at one strike is trading at a lower price than the synthetic short underlying
at the higher strike, such that the differential may be exploited.
If the pricing differential can be exploited, a profit will occur, the extent of the mis-pricing
translating into the level of profit realised. The Box is regularly used by traders to close out
positions near expiry. Generally traded at par (zero) for options on futures, and at the net
cost of carry for index and equity options. Can be problematic if all positions are not closed
out at exactly the same time.
Long calendar spread:

This is a time value trade (involving the sale and purchase of options with different expiry
57 | P a g e
months) and as such cannot be adequately plotted in terms of its risk/reward profile.
The trade: Sell near put (call), buy far put (call) at same strike.
Market expectation: Direction neutral/volatility bullish. The near term option decays faster
than the longer dated option, therefore the trade benefits from an increase in volatility.
Profit and loss characteristics at expiry (of near term option):
The potential profit in a time value trade is derived from the time decay characteristics of
options (see the description of Theta in the introduction). The near, written put (call) will
decay at a rate faster than that of the far, purchased put (call) as it approaches expiry and it
is this differential in the rate of time decay which may yield a profit. Assuming the options
are at-the-money and the market remains at this level, the sold option will expire worthless
and the purchased option, although not possessing intrinsic value, will hold time value. As
the initial position is established at a loss (because the far option will command a higher
premium), to yield a profit, the time value of the long option after the expiry of the short
dated option must be such that its value is greater than the initial cost of establishing the
position.
Long diagonal spread:

This is a time value trade (involving the sale and purchase of options with different expiry
months) and as such cannot be adequately plotted in terms of its risk/reward profile.
The trade: Sell near put (call), buy far put (call) at a different strike.
58 | P a g e
Market expectation: Expected to profit from time-decay differential and an increase in
volatility. In addition, the position is suitable for a directional view on the underlying, e.g. sell
Sep 99.00 call and buy Dec 101.00 call, giving a reduced cost calendar spread trade.
Profit & loss characteristics at expiry (of near option):
The profitability of the trade depends upon the differing time decay characteristics of the
near, sold put (call) and the far, purchased put (call). The difference between this trade and
that of a Calendar spread is that a diagonal spread involves options with different strike
prices. As with a Calendar spread, the maximum loss will occur if the near, sold call (put)
moves in-the-money and is exercised, followed by a fall (rise) in the market rendering the
purchased call (put) worthless on expiry.
OBSERVATONS:
Brokerages charged by different trading firms for option trading
A detailed study has done in order to evaluate the cost effectiveness and services quality of
different brokerage firms in Mysore so that the cost of transaction is at the minimum the result of
this study :-
59 | P a g e
Trading firms. Brokerage charged for option Quality of services.
trading.
Angel broking 100rs per lot Good
Kotak securities 100rs per lot Good
Way2wealth 0.05% total amount traded Average
Reliance money 50rs per lot Below expectation
ICICI direct 95 rs per lot Good
India Infoline 0.05% total amount traded Average
RKglobal 9rs per lot plus 112rs per month for Average
software maintenance.
Table 2.1
The above stated brokerage charges can be lowered depending on the bargaining power of the
investor which directly depends on the amount of investment the investor is making and his
turnover.
This study is done by consulting the employees of the respective brokerage firms for details
regarding brokerage and the facilities that they are providing. Apart from this a few customers
were also interviewed in order know there satisfaction level and to judge the effectiveness of the
services that the brokerage firm has promised.
Findings
Long call
Market expectation: Market bullish/volatility bullish. The more bullish the expectation, the
further out-of-the-money (higher strike) the purchased call should be. A Long Call combines
limited downside exposure with high gearing in a rising market.
60 | P a g e
Loss: Limited to the initial premium
Short call
Market expectation: Market bearish/volatility bearish. Holder expects a gradual fall in the market
and lower volatility. Profit is limited to the premium received and thus if the market view is more
than moderately bearish, a Long Put may yield higher profits.
Profit: Limited to the premium received from selling the call.
Long put
Market expectation: Market bearish/volatility bullish. A Long Put Combines limited upside
exposure with high gearing in a falling market.
Profit: Effectively unlimited in a falling market.
Loss: Limited to the initial premium paid.
Short put
Market expectation: Market bullish/volatility bearish. Profit is limited to the premium received
and thus if the market view is more than moderately bullish, a long call may yield higher profits.
Profit: Limited to the premium received from selling the put.
Long call spread
Market expectation: Market bullish/volatility neutral. The spread offers a limited profit potential
if the underlying rises and a limited loss if the underlying falls
profit occurs where the underlying rises to the level of the higher strike or above.
Loss: Limited to any initial premium paid in establishing the position. Maximum loss occurs
61 | P a g e
where the underlying falls to the level of the lower strike or below.
Short put spread
Market expectation: Market bullish/volatility neutral. The spread offers a limited profit potential
if the underlying rises and a limited loss if the underlying falls.
Profit: Limited to the net premium credit. Maximum profit occurs where underlying rises to
the level of the higher strike or above.
Loss: Maximum loss occurs where the underlying falls to the level of the lower strike or
below.
Long call spread
Market expectation: Market bearish/volatility neutral. The spread offers a limited profit if the
underlying falls and a limited loss exposure if the underlying rises.
Profit: Limited to the net premium credit. Maximum profit occurs where underlying falls to
the level of the lower strike or below.
Loss: Limited to the difference between the two strikes minus the net credit received in
establishing the position. Maximum loss occurs where the underlying rises to the level of
the higher strike or above.
Long put spread
Market expectation: Market bearish/volatility neutral. The spread offers a limited loss exposure
if the underlying rises, and a limited profit if the underlying falls.
profit occurs where underlying falls to the level of the lower strike or below.
Loss: Limited to the initial premium paid in establishing the position. Maximum loss occurs
where the underlying rises to the level of the higher strike or above.
62 | P a g e
Long combo
Market expectation: Market bearish/volatility neutral. The plateau makes this a more suitable
trade than a short future if volatility expectations are uncertain.
Profit: Unlimited in a falling market.
Short combo
Market expectation: Market bullish/volatility neutral. The plateau makes this a more suitable
trade than a long future if volatility expectations are uncertain.
Long straddle
Market expectation: Market neutral/volatility bullish. With the underlying and an unknown
directional move or increase in volatility is anticipated.
Profit: Unlimited for an increase or decrease in the underlying.
Loss: Limited to the premium paid in establishing the position. Will be greatest if the
Underlying.
Short straddle
Market expectation: Market neutral/volatility bearish. With the underlying and a period
63 | P a g e
of low or decreasing volatility is anticipated, and the underlying is not expected to move
dramatically.
Profit: Limited to the credit received from establishing the position. Highest if the market
Settles.
Loss: Unlimited for both an increase or decrease in the underlying.
Long strangle
Market expectation: Market neutral/volatility bullish. A larger directional move is needed
than a straddle in order to yield a profit but if the market stagnates, losses will be less.
Profit: The profit potential is unlimited although a substantial directional movement is
necessary to yield a profit for both a rise or fall in the underlying.
Loss: Occurs if the market is static; limited to the premium paid in establishing the position.
Short strangle
Market expectation: Direction neutral/volatility bearish. More cautious than a straddle as profit
potential spans a larger range although maximum potential profits will be lower.
Profit: Limited to the premium received.
Loss: Unlimited for a sharp move in the underlying in either direction.
Long guts
Market expectation: Market neutral/volatility bullish.
Profit: Unlimited in a rising or falling market. A substantial directional movement is required
however.
64 | P a g e
Loss: Limited to the initial premium.
Long butterfly
Direction neutral/volatility bearish.
Short butterfly
Market neutral/volatility bullish.
Long condor
Direction neutral/volatility bearish.
Short condor
Direction neutral/volatility bullish.
Long box
Direction neutral/volatility neutral.
Long calendar spread
Direction neutral/volatility bullish.
65 | P a g e
III. Conclusion and Recommendations
Based on the analysis of various option strategies, all strategies cannot be used in all market
conditions. To profitably use these strategies one has to have the use the right strategies in the
right conditions. The various market scenarios can be:
• Bull market
• Bear market
• Stable market
• Volatile market
The option strategies to be adopted in each of the above market scenarios are as follows:
• Bull Market Strategies – These strategies are to be used when one is bullish about the
market
o Long Call
o Short Put
66 | P a g e
o Long call spread
o Short put spread
o Short combo
o Long diagonal spread
• Bear Market Strategies – These strategies are to be used when one is bearish about the
market
o Short Call
o Long put
o short call spread
o Long put spread
o Long combo
o Short diagonal spread
• Volatile Market Strategies – When there is a possibility of a huge fluctuation on either

side of market
o Long straddle
o Long strangle
o Long gut
o Short butterfly
o Short condor
• Stable Market Strategies – When the market is expected to remain or consolidate in a

certain range
o Short straddle
o Short strangle
o Short gut
o Long butterfly
67 | P a g e
o Long condor
68 | P a g e
Long call
69 | P a g e
Buy a call
strike price 4900
premium 64
spot price 4910

intrinsic value 10
time value 54
nift stri exci gro net niftyspo profits

y ke se ss prof t
spo pric (y/N prof it "4300" -64
t e ) it
"4400" -64
430 490 n -64 -64
0 0 "4500" -64
440 490 n -64 -64 "4600" -64
0 0 "4700" -64
450 490 n -64 -64 "4800" -64
0 0 "4900" -64
460 490 n -64 -64 "5000" 36
0 0
"5100" 136
470 490 n -64 -64
0 0 "5200" 236
480 490 n -64 -64 "5300" 336
0 0 "5400" 436
490 490 y 0 -64 "5500" 536
0 0 "5600" 636
496 490 y 64 0
4 0
500 490 y 100 36
0 0
510 490 y 200 136
0 0
520 490 y 300 236
0 0
530 490 y 400 336
0 0
540 490 y 500 436
0 0
550 490 y 600 536
0 0
560 490 y 700 636
0 0
70 | P a g e
Short call
Sell a call
strike price 4900
premium 64
spot price 4910

intrinsic 10
value
time value 54
nift stri exci gro net nifty profits

y ke se ss prof spot
spo pric (y/N prof it "4300" 64
t e ) it
"4400" 64
430 490 n 64 64
0 0 "4500" 64
440 490 n 64 64 "4600" 64
0 0 "4700" 64
450 490 n 64 64 "4800" 64
0 0 "4900" 64
460 490 n 64 64 "5000" -36
0 0
"5100" -136
470 490 n 64 64
0 0 "5200" -236
480 490 n 64 64 "5300" -336
"5400" -436
71 | P a g e
"5500" -536
"5600" -636
0 0
490 490 y 0 64
0 0
496 490 y -64 0
4 0
500 490 y -100 -36
0 0
510 490 y -200 -136
0 0
520 490 y -300 -236
0 0
530 490 y -400 -336
0 0
540 490 y -500 -436
0 0
550 490 y -600 -536
0 0
560 490 y -700 -636
0 0
Long put
Buy a put
strike price 4900
premium 64
72 | P a g e
spot price 4910
intrensic 0
value
time value 64
nift stri exci gro net nifty net

y ke se ss prof spot profit
spo pric (y/N prof it "4300" 536
t e ) it "4400" 436
430 490 y 600 536
"4500" 336
0 0
440 490 y 500 436 "4600" 236
0 0 "4700" 136
450 490 y 400 336 "4800" 36
0 0 "4900" -64
460 490 y 300 236 "5000" -64
0 0 "5100" -64
470 490 y 200 136
"5200" -64
0 0
480 490 y 100 36 "5300" -64
0 0 "5400" -64
483 490 y 64 0 "5500" -64
6 0 "5600" -64
490 490 y 0 -64
0 0
500 490 n -64 -64
0 0
510 490 n -64 -64
0 0
520 490 n -64 -64
0 0
530 490 n -64 -64
0 0
540 490 n -64 -64
0 0
550 490 n -64 -64
0 0
560 490 n -64 -64
0 0
73 | P a g e
Short put
Sell a put
strike price 4900
premium 64
spot price 4910

intrensic 0
value
time value 64
nift stri exci gro net

nifty profits
y ke se ss prof
spot
spo pric (y/N prof it
"4300" -536
t e ) it
430 490 y -600 -536 "4400" -436
0 0 "4500" -336
440 490 y -500 -436 "4600" -236
0 0 "4700" -136
450 490 y -400 -336 "4800" -36
0 0 "4900" 64
460 490 y -300 -236
"5000" 64
0 0
470 490 y -200 -136 "5100" 64
0 0 "5200" 64
480 490 y -100 -36 "5300" 64
0 0 "5400" 64
483 490 y -64 0 "5500" 64
6 0
"5600" 64
74 | P a g e
490 490 y 0 64
0 0
500 490 n 64 64
0 0
510 490 n 64 64
0 0
520 490 n 64 64
0 0
530 490 n 64 64
0 0
540 490 n 64 64
0 0
550 490 n 64 64
0 0
560 490 n 64 64
0 0
Long call spread
Buy a call
strike price at premium

4900
spot price 4910 64
intrensic 0
value
time value 64

y ke se ss prof
75 | P a g e
t e ) it
430 490 N -64 -64
0 0
440 490 N -64 -64
0 0
450 490 N -64 -64
0 0
460 490 N -64 -64
0 0
470 490 N -64 -64
0 0
480 490 N -64 -64
0 0
490 490 Y -64 -64
0 0
493 490 Y -25 -25
9 0
500 490 Y 100 36
0 0
510 490 Y 200 136
0 0
520 490 Y 300 236
0 0
530 490 Y 400 336
0 0
540 490 Y 500 436
0 0
550 490 Y 600 536
0 0
76 | P a g e
opti
on
profi
ts
-39
-39
-39
-39
-39
-39
-39
0
61
61
61
61
61
61
Sell a call
strike price at 5000 premium 25

spot price 4910
intrensic value 0
time value 25

y ke se ss prof
t e ) it
430 500 n 0 25
0 0
440 500 n 0 25
0 0
450 500 n 0 25
0 0
77 | P a g e
460 500 n 0 25
0 0
470 500 n 0 25
0 0
480 500 n 0 25
0 0
490 500 n 0 25
0 0
493 500 n 0 25
9 0
500 500 y 0 25
0 0
510 500 y -100 -75
0 0
520 500 y -200 -175
0 0
530 500 y -300 -275
0 0
540 500 y -400 -375
0 0
550 500 y -500 -475
0 0
78 | P a g e
opti
on
profi
t
-39
-39
-39
-39
-39
-39
breakeven point will be 4939
-39
(ie;4900+cost of establishing 0
the option)
61
61
61
61
61
61
Short put spread
Sell a put at higher strike
strike price 5000

Premium 112
spot price 4910
intrensic value 90
time value 32
79 | P a g e
nift stri exci gro net option
y ke se ss prof profits
spo pric (y/N prof it -108
t e ) it
-108
430 500 y -700 -578
0 0 -108
440 500 y -600 -478 -108
0 0 -108
450 500 y -500 -378 -108
0 0 -8
460 500 y -400 -278 0
0 0
92
470 500 y -300 -178
0 0 92
480 500 y -200 -78 92
0 0 92
490 500 y -100 22 92
0 0 92
490 500 y -92 30
92
8 0
500 500 y 0 122
0 0
510 500 n 122 122
0 0
520 500 n 122 122
0 0
530 500 n 122 122
0 0
80 | P a g e
540 500 n 122 122
0 0
550 500 n 122 122
0 0
560 500 n 122 122
0 0
Buy a put at lower strike
strike price 4800

spot price 4910
intrensic 0
value
time value 30
81 | P a g e
y ke se ss prof profit
t e ) it -108
430 480 y 500 470 -108
0 0 -108
440 480 y 400 370 -108
0 0
-108
450 480 y 300 270
0 0 -8
460 480 y 200 170 0
0 0 92
470 480 y 100 70 92
0 0 92
480 480 y 0 -30 92
0 0
92
490 480 n 30 -30
0 0 92
490 480 n 30 -30 92
8 0
500 480 n 30 -30
0 0
510 480 n 30 -30
0 0
520 480 n 30 -30
0 0
530 480 n 30 -30
0 0
540 480 n 30 -30
0 0
550 480 n 30 -30
0 0
560 480 n 30 -30
0 0
breakeven point will be

4908
82 | P a g e
Short Call spread
Sell a call at lower strike
strike price at 4800

intrinsic value 110
spot price 4910
time value 18
Premium 128
83 | P a g e
y ke se ss prof option
spo pric (y/N prof it profits
t e ) it 102
430 480 n 128 128 102
0 0 102
440 480 n 128 128 102
0 0 102
450 480 n 128 128
102
0 0
460 480 n 128 128 2
0 0 0
470 480 n 128 128 -98
0 0 -98
480 480 y 0 128 -98
0 0 -98
490 480 y 100 28
-98
0 0
490 480 y 102 26 -98
2 0 -98
500 480 y 200 -72
0 0
510 480 y 300 -172
0 0
520 480 y 400 -272
0 0
530 480 y 500 -372
0 0
540 480 y 600 -472
0 0
550 480 y 700 -572
0 0
560 480 y 800 -672
0 0
84 | P a g e
Buy a call at higher strike
spot price 4910

intrinsic value 0
time value 26
Premium 26
nifty strike excise gross net option

spot price (y/N) profit profit profits
4300 5000 n -26 -26 102
4400 5000 n -26 -26 102
4500 5000 n -26 -26 102
4600 5000 n -26 -26 102
4700 5000 n -26 -26 102
4800 5000 n -26 -26 102
4900 5000 n -26 -26 2
4902 5000 n -26 -26 0
5000 5000 y 0 -26 -98
5100 5000 y 100 74 -98
5200 5000 y 200 174 -98
5300 5000 y 300 274 -98
5400 5000 y 400 374 -98
5500 5000 y 500 474 -98
5600 5000 y 600 574 -98
85 | P a g e
Long put spread
Buy a put at higher strike
strike price 5000

spot price 4910
intrinsic value 90
time value 32
Premium 122
86 | P a g e
y ke se ss profi option
spo pric (y/N prof t profit
t e ) it 108
430 500 y 700 578 108
0 0 108
440 500 y 600 478 108
0 0 108
450 500 y 500 378 108
0 0
8
460 500 y 400 278
0 0 -92
470 500 y 300 178 -92
0 0 -92
480 500 y 200 78 -92
0 0 -92
490 500 y 100 -22
-92
0 0
490 500 y 92 -30 -92
8 0
500 500 y 0 -122
0 0
510 500 n -122 -122
0 0
520 500 n -122 -122
0 0
530 500 n -122 -122
0 0
540 500 n -122 -122
0 0
550 500 n -122 -122
0 0
560 500 n -122 -122
0 0
87 | P a g e
Sell a put option at a lower strike 4800
strike price premium 30

4800

spot price (y/N) profit profit profit
4300 4800 y -500 -470 108
4400 4800 y -400 -370 108
4500 4800 y -300 -270 108
4600 4800 y -200 -170 108
4700 4800 y -100 -70 108
4800 4800 y 0 30 108
4900 4800 n 30 30 8
4908 4800 n 30 30 0
5000 4800 n 30 30 -92
5100 4800 n 30 30 -92
5200 4800 n 30 30 -92
5300 4800 n 30 30 -92
5400 4800 n 30 30 -92
5500 4800 n 30 30 -92
5600 4800 n 30 30 -92
Breakeven point will be 4908
88 | P a g e
Sell a call at higher strike
strike price 5000

spot price 4910
89ntrinsic value 0
time value 25
Premium 25
89 | P a g e
nift strik exci gro net
y e se ss prof option
t e ) it 495
430 5000 n 25 25 395
0 295
440 5000 n 25 25 195
0
95
450 5000 n 25 25
0 -5
460 5000 n 25 25 -5
0 -5
470 5000 n 25 25 -105
0 -205
479 5000 n 25 25
-305
5
480 5000 n 25 25 -405
0 -505
490 5000 n 25 25 -605
0
500 5000 y 0 25
0
510 5000 y -100 -75
0
520 5000 y -200 -175
0
530 5000 y -300 -275
0
540 5000 y -400 -375
0
550 5000 y -500 -475
0
560 5000 y -600 -575
0
90 | P a g e
Buy a put at a lower strike
strike price 4800

spot price 4910
intrensic value 0
time value 30
Premium 30

4300 4800 y 500 470 495
4400 4800 y 400 370 395
4500 4800 y 300 270 295
4600 4800 y 200 170 195
4700 4800 y 100 70 95
4795 4800 y 5 -25 0
4800 4800 y 0 -30 -5
4900 4800 n -30 -30 -5
5000 4800 n -30 -30 -5
5100 4800 n -30 -30 -105
5200 4800 n -30 -30 -205
5300 4800 n -30 -30 -305
5400 4800 n -30 -30 -405
5500 4800 n -30 -30 -505
5600 4800 n -30 -30 -605
Breakeven point is at 4795
91 | P a g e
Short combo
buy a call at higher strike
strike price 5000

spot price 4910
intrensic value 0
time value 25
Premium 25
92 | P a g e
option
nifty strik exci gro net profit
spot e se ss prof -495
price (y/N prof it -395
) it
-295
4300 5000 n -25 -25
-195
4400 5000 n -25 -25
-95
4500 5000 n -25 -25
5
4600 5000 n -25 -25
5
4700 5000 n -25 -25
5
4795 5000 n -25 -25
105
4800 5000 n -25 -25
205
4900 5000 n -25 -25
305
5000 5000 y 0 -25
405
5100 5000 y 100 75
505
5200 5000 y 200 175
605
5300 5000 y 300 275
5400 5000 y 400 375
5500 5000 y 500 475
5600 5000 y 600 575
Sell a put at lower strike
strike price 4800 premium

30
spot price 4910
intrensic value 0
93 | P a g e
time value 30

spot price (y/N) profit profit profit
4300 4800 y -500 -470 -495
4400 4800 y -400 -370 -395
4500 4800 y -300 -270 -295
4600 4800 y -200 -170 -195
4700 4800 y -100 -70 -95
4795 4800 y -5 25 0
4800 4800 y 0 30 5
4900 4800 n 30 30 5
5000 4800 n 30 30 5
5100 4800 n 30 30 105
5200 4800 n 30 30 205
5300 4800 n 30 30 305
5400 4800 n 30 30 405
5500 4800 n 30 30 505
5600 4800 n 30 30 605
Breakeven point is at 4795
Long straddle
buy a put at a strike price of 4900
spot price 4910

intrensic value 0
time value 63
94 | P a g e
Premium 63
nifty strike excise gross net

spot price (y/N) profit profit option
4300 4900 y 600 537 profits
4400 4900 y 500 437 473
4500 4900 y 400 337 373
4600 4900 y 300 237 273
4700 4900 y 200 137 173
4773 4900 y 127 64 73
4800 4900 y 100 37 -27
4900 4900 y 0 -63 -127
5000 4900 n -63 -63 -27
5027 4900 n -63 -63 73
5100 4900 n -63 -63 173
5200 4900 n -63 -63 273
5300 4900 n -63 -63 373
5400 4900 n -63 -63 473
5500 4900 n -63 -63 573
95 | P a g e
5600 4900 n -63 -63
buy a call at the same strike 4900
spot price 4910

intrensic value 10
time value 54
Premium 64

4300 4900 N -64 -64 473
4400 4900 N -64 -64 373
4500 4900 N -64 -64 273
4600 4900 N -64 -64 173
4700 4900 N -64 -64 73
4783 4900 N -64 -64 0
4800 4900 N -64 -64 -27
4900 4900 Y 0 -64 -127
5000 4900 Y 100 36 -27
5027 4900 Y 127 63 0
5100 4900 Y 200 136 73
5200 4900 Y 300 236 173
5300 4900 Y 400 336 273
5400 4900 Y 500 436 373
5500 4900 Y 600 536 473
5600 4900 Y 700 636 573
Breakeven point will be at 5027 & 4773
96 | P a g e
Short straddle
sell a put
strike price 4900

spot price 4910
intrensic 0
value
time value 63
Premium 63
97 | P a g e
4300 4900 y -600 -537 -473
4400 4900 y -500 -437 -373
4500 4900 y -400 -337 -273
4600 4900 y -300 -237 -173
4700 4900 y -200 -137 -73
4773 4900 y -127 -64 27
4800 4900 y -100 -37 127
4900 4900 y 0 63 27
5000 4900 n 63 63 -73
5027 4900 n 63 63 -173
5100 4900 n 63 63 -273
5200 4900 n 63 63 -373
5300 4900 n 63 63 -473
5400 4900 n 63 63 -573
5500 4900 n 63 63
5600 4900 n 63 63
Sell a call
Strike price 4900

Spot price 4910
Intrinsic value 10
Time value 54
Premium 64
98 | P a g e
4300 4900 n 64 64 -473
4400 4900 n 64 64 -373
4500 4900 n 64 64 -273
4600 4900 n 64 64 -173
4700 4900 n 64 64 -73
4773 4900 n 64 64 0
4800 4900 n 64 64 27
4900 4900 y 0 64 127
5000 4900 y -100 -36 27
5027 4900 y -127 -63 0
5100 4900 y -200 -136 -73
5200 4900 y -300 -236 -173
5300 4900 y -400 -336 -273
5400 4900 y -500 -436 -373
5500 4900 y -600 -536 -473
5600 4900 y -700 -636 -573
Breakeven will be at 5027 & 4773
Long strangle
buy a put
Strike price 4900

spot price 4910
Intrensic 0
value
time value 64
Premium 64
99 | P a g e
profits
4300 4900 y 600 536
510
4400 4900 y 500 436
410
4500 4900 y 400 336
310
4600 4900 y 300 236
210
4700 4900 y 200 136
110
4800 4900 y 100 36
10
4810 4900 y 90 26
-90
4900 4900 y 0 -64
-90
5000 4900 n -64 -64
10
5090 4900 n -64 -64
110
5100 4900 n -64 -64
210
5200 4900 n -64 -64
310
5300 4900 n -64 -64
410
5400 4900 n -64 -64
510
5500 4900 n -64 -64
5600 4900 n -64 -64
100 | P a g e
Short strangle
101 | P a g e
Sell a put
Strike price 4900

spot price 4910
Intrensic value 0
time value 64
Premium 64

4300 4900 y -600 -536 profits
4400 4900 y -500 -436 -510
4500 4900 y -400 -336 -410
4600 4900 y -300 -236 -310
4700 4900 y -200 -136 -210
4800 4900 y -100 -36 -110
4810 4900 y -90 -26 -10
4900 4900 y 0 64 90
5000 4900 n 64 64 90
-10
-110
102 | P a g e
-210
-310
-410
-510
5090 4900 n 64 64
5100 4900 n 64 64
5200 4900 n 64 64
5300 4900 n 64 64
5400 4900 n 64 64
5500 4900 n 64 64
5600 4900 n 64 64
nift stri exci gros net option

y ke se s profi profits
spo pric (y/N profi t
t e ) t
430 500 n 26 26 -510
0 0
sell a call at higher strike 440 500 n 26 26 -410
0 0
strike price 5000 450 500 n 26 26 -310
spot price 4910 0 0
460 500 n 26 26 -210
103ntrinsic 0
0 0
value
470 500 n 26 26 -110
time value 26
0 0
Premium 26 480 500 n 26 26 -10
0 0
481 500 n 26 26 0
0 0
490 500 n 26 26 90
0 0
500 500 y 0 26 90
0 0
509 500 y -90 -64 0
0 0
510 500 y -100 -74 -10
0 0
520 500 y -200 -174 -110
0 0
breakeven will at 4810 & 5090 530 500 y -300 -274 -210
0 0
540 500 y -400 -374 103
-310
|Page
0 0
550 500 y -500 -474 -410
0 0
560 500 y -600 -574 -510
0 0
Long guts
buy a call
strike price 490

0
Spot price 491
0
intrensic 10
value
time value 54
premium 64
option
profits
514
414
314
214
114
nifty strike excise gross net 14
spot price (y/N) profit profit -86
4300 4900 n -64 -64 -86
4400 4900 n -64 -64 14
114
104 | P a g e
214
314
414
514
4500 4900 n -64 -64
4600 4900 n -64 -64
4700 4900 n -64 -64
4800 4900 n -64 -64
4814 4900 n -64 -64
4900 4900 y 0 -64
5000 4900 y 100 36
5086 4900 y 186 122
5100 4900 y 200 136
5200 4900 y 300 236
5300 4900 y 400 336
5400 4900 y 500 436
5500 4900 y 600 536
5600 4900 y 700 636
Buy a put at higher strike
strike prce 5000
spot price 4910
intrensic 90
value
time value 32
premium 122
105 | P a g e
nift stri exci gro net opti
y ke se ss prof on
spo pric (y/N prof it profi
t e ) it ts
430 500 y 700 578 514
0 0
440 500 y 600 478 414
0 0
450 500 y 500 378 314
0 0
460 500 y 400 278 214
0 0
470 500 y 300 178 114
0 0
480 500 y 200 78 14
0 0
481 500 y 186 64 0
4 0
490 500 y 100 -22 -86
Breakeven point will be at 4814 & 5058 0 0
500 500 y 0 -122 -86
0 0
505 500 n -122 -122 0
8 0
510 500 n -122 -122 14
0 0
520 500 n -122 -122 114
0 0
530 500 n -122 -122 214
Short guts 0 0
540 500 n -122 -122 314
0 0 106 | P a g e
550 500 n -122 -122 414
0 0
560 500 n -122 -122 514
0 0
sell a call
strike price 4900

spot price 4910
intrensic 10
value
time value 54
premium 64

4300 4900 n 64 64 -514
4400 4900 n 64 64 -414
4500 4900 n 64 64 -314
4600 4900 n 64 64 -214
4700 4900 n 64 64 -114
4800 4900 n 64 64 -14
4814 4900 n 64 64 86
4900 4900 y 0 64 86
5000 4900 y -100 -36 -14
-114
107 | P a g e
-214
-314
-414
-514
5086 4900 y -186 -122
5100 4900 y -200 -136
5200 4900 y -300 -236
5300 4900 y -400 -336
5400 4900 y -500 -436
5500 4900 y -600 -536
5600 4900 y -700 -636
nift stri exci gro net opti

y ke se ss prof on
spo pric (y/N prof it profi
Sell a put at higher strike
t e ) it ts
430 500 y -700 -578 -514
strike price 5000
0 0
spot price 4910
440 500 y -600 -478 -414
intrensic 90 0 0
value 450 500 y -500 -378 -314
time value 32 0 0
premium 122 460 500 y -400 -278 -214
0 0
470 500 y -300 -178 -114
0 0
480 500 y -200 -78 -14
0 0
481 500 y -186 -64 0
4 0
490 500 y -100 22 86
0 0
500 500 y 0 122 86
0 0
508 500 n 122 122 0
6 0
Breakeven will be at 4814 & 5086 510 500 n 122 122 -14
0 0
520 500 n 122 122 -114
0 0
530 500 n 122 122 -214
0 0
540 500 n 122 122 -314
108 | P a g e
0 0
550 500 n 122 122 -414
0 0
560 500 n 122 122 -514
0 0
Long butterfly
buy a put Sell two puts at higher strike
strike price 4900
spot price 4910
intrensic 0
value
time value 64
premium 64
109 | P a g e
y ke se ss prof
t e ) it
430 500 y
strike price -
5000 -
0 0 140 127
spot price 4910
0 8
intrensic
440 500 y 90- -
0 value0 120 107
time value 320 8
450premium
500 y 244
- -878
0 0 100
nift stri exci gro net 0
y ke se ss prof 460 500 y -800 -678
spo pric (y/N prof it 0 0
t e ) it 470 500 y -600 -478
430 490 y 600 536 0 0
0 0 480 500 y -400 -278
440 490 y 500 436 0 0
0 0 490 500 y -200 -78
450 490 y 400 336 0 0
0 0 492 500 y -160 84
460 490 y 300 236 0 0
0 0 500 500 y 0 244
470 490 y 200 136 0 0
0 0 508 500 n 244 244
480 490 y 100 36 0 0
0 0 510 500 n 244 244
490 490 y 0 -64 0 0
0 0 520 500 n 244 244
492 490 n -64 -64 0 0
0 0 530 500 n 244 244
500 490 n -64 -64 0 0
540 500 n 244 244
110 | P a g e
0 0
550 500 n 244 244
0 0
560 500 n 244 244
0 0
0 0
508 490 n -64 -64
0 0
510 490 n -64 -64
0 0
520 490 n -64 -64
0 0
530 490 n -64 -64
0 0
540 490 n -64 -64
0 0
550 490 n -64 -64
0 0
560 490 n -64 -64
0 0
Buy a put at an higher strike
strike price 5100
premium 200
spot price 4910
intrensic 190
value
time value 10
111 | P a g e
112 | P a g e
y ke se ss prof profits
t e ) it -142
430 510 y 800 600 -142
0 0
-142
440 510 y 700 500
0 0 -142
450 510 y 600 400 -142
0 0 -142
460 510 y 500 300 0
0 0 80
470 510 y 400 200
0
0 0
480 510 y 300 100 -20
0 0 -20
490 510 y 200 0 -20
0 0 -20
492 510 y 180 -20 -20
0 0 -20
500 510 y 100 -100
0 0
508 510 y 20 -180
0 0
510 510 y 0 -200
0 0
520 510 n 200 -200
0 0
530 510 n 200 -200
0 0
540 510 n 200 -200
0 0
550 510 n 200 -200
0 0
560 510 n 200 -200
0 0
113 | P a g e
nifty option
spot profits
"4300" -142
"4400" -142
"4500" -142
"4600" -142
"4700" -142
"4800" -142
"4900" -142
"5000" 80
"5100" -20
"5200" -20
"5300" -20
"5400" -20
"5500" -20
"5600" -20
114 | P a g e
Short butterfly
Sell a call Buy two calls
strike price 4800
spot price 4910
intrensic 110
value
time value 18
premium 128
115 | P a g e
strike price 4900
spot price 4910
premium 128
intrensic value 20
time value 108
nift strik exci gro net nift stri exci gro net
y e se ss prof y ke se ss prof
spo pric (y/N prof it spo pric (y/N prof it
t e ) it t e ) it
430 4800 n 128 128 430 490 n -128 -128
0 0 0
440 4800 n 128 128 440 490 n -128 -128
0 0 0
450 4800 n 128 128 450 490 n -128 -128
0 0 0
460 4800 n 128 128 460 490 n -128 -128
0 0 0
470 4800 n 128 128 470 490 n -128 -128
0 0 0
480 4800 y 0 128 480 490 n -128 -128
0 0 0
480 4800 y -8 120 480 490 n -128 -128
8 8 0
490 4800 y -100 28 490 490 y 0 -128
0 0 0
499 4800 y -192 -64 499 490 y 184 56
2 2 0
500 4800 y -200 -72 500 490 y 200 72
0 0 0
510 4800 y -300 -172 510 490 y 400 272
0 0 0
520 4800 y -400 -272 520 490 y 600 472
0 0 0
530 4800 y -500 -372 530 490 y 800 672
0 0 0
540 4800 y -600 -472 540 490 y 100 872
0 0 0 0
550 4800 y -700 -572 550 490 y 120 107
0 0 0 0 2
560 4800 y -800 -672 560 490 y 140 127
0 0 0 2
116 | P a g e
0
Sell a call at higher strike
strike price 510

0
spot price 491
0
premium 8
intrensic 8
value
time value
117 | P a g e
4300 5100 n 8 8 8
4400 5100 n 8 8 8
4500 5100 n 8 8 8
4600 5100 n 8 8 8
4700 5100 n 8 8 8
4800 5100 n 8 8 8
4808 5100 n 8 8 0
4900 5100 n 8 8 -92
4992 5100 n 8 8 0
5000 5100 n 8 8 8
5100 5100 n 0 8 108
5200 5100 y -100 -92 108
5300 5100 y -200 -192 108
5400 5100 y -300 -292 108
5500 5100 y -400 -392 108
5600 5100 y -500 -492 108
nifty option Breakeven will be at 4808 & 4992

spot profits
"4300" 8
"4400" 8
"4500" 8
"4600" 8
"4700" 8
"4800" 8
"4900" -92
"5000" 8
"5100" 108
"5200" 108
"5300" 108
"5400" 108
"5500" 108
"5600" 108
118 | P a g e
Long condor
Buy a put
strike price 490

0
spot price 491
0
intrensic 0
value
time value 64
premium 64
nifty strike price excise gross net

spot (y/N) profit profit
119 | P a g e
4300 4900 y 600 536
4400 4900 y 500 436
4500 4900 y 400 336
4600 4900 y 300 236
4700 4900 y 200 136
4800 4900 y 100 36
4900 4900 y 0 -64
4932 4900 n -64 -64
5000 4900 n -64 -64
5100 4900 n -64 -64
5168 4900 n -64 -64
5200 4900 n -64 -64
5300 4900 n -64 -64
5400 4900 n -64 -64
5500 4900 n -64 -64
5600 4900 n -64 -64
Sell put at two higher strikes
strike price 5000
premium 122
spot price 4910
intrensic 90
value
time value 32
120 | P a g e
y ke se ss prof
t e ) it
430 510 y -800 -600
0 0
440 510 y -700 -500
strike price 5100
0 0
450 510 y -600 -400 premium 200
0 0 spot price 4910
460 510 y -500 -300 intrensic 190
0 0 value
470 510 y -400 -200 time value 10
0 0
nifty strik exci 480
gross 510
net y -300 -100
spot e se 0
profit 0profi
pric (y/N 490 510
t y -200 0
e ) 0 0
4300 5000 y 493
-700 510
-578 y -168 32
2 0
4400 5000 y -600 -478
500 510 y -100 100
4500 5000 y -500
0 0-378
4600 5000 y -400
510 -278 y
510 0 200
4700 5000 y -300
0 0-178
4800 5000 y 516
-200 510
-78 n 200 200
4900 5000 y 8
-100 022
4932 5000 y 520
-68 510
54 n 200 200
0 0
5000 5000 y 0 122
530 510 n 200 200
5100 5000 n 122
0 0122
540 510 n 200 200 121 | P a g e
0 0
550 510 n 200 200
0 0
560 510 n 200 200
0 0
5168 5000 n 122 122
5200 5000 n 122 122
5300 5000 n 122 122
5400 5000 n 122 122
5500 5000 n 122 122
5600 5000 n 122 122
Buy put at yet higher strike

nift strik exci gro net
y e se ss prof option
t e ) it -32
430 5200 y 900 610 -32
0 -32
440 5200 y 800 510 -32
0 -32
450 5200 y 700 410
-32
0
460 5200 y 600 310 -32
0 68
470 5200 y 500 210 68
0 -32
480 5200 y 400 110 -32
0
-32
490 5200 y 300 10
0 -32
493 5200 y 268 -22 -32
2
500 5200 y 200 -90
0
510 5200 y 100 -190
0
122 | P a g e
516 5200 y 32 -258
8
520 5200 y 0 -290
0
530 5200 n -290 -290
0
540 5200 n -290 -290
0
550 5200 n -290 -290
0
560 5200 n -290 -290
0
opti
on
profi
ts
-32
-32
-32
-32
-32
-32
-32
0
68
68
0
-32
-32
-32
-32
breakeven will be at 4932 & 5168
-32
123 | P a g e
Shot condor
Sell call
strike price 4800

spot price 4910
intrensic value 90
time value 38
premium 128

spot price (y/N) profit profit
4300 4800 n 128 128
4400 4800 n 128 128
4500 4800 n 128 128
4600 4800 n 128 128
4700 4800 n 128 128
4800 4800 y 0 128
4846 4800 y -46 82
4900 4800 y -100 28
5000 4800 y -200 -72
5054 4800 y -254 -126
5100 4800 y -300 -172
5200 4800 y -400 -272
5300 4800 y -500 -372
5400 4800 y -600 -472
124 | P a g e
5500 4800 y -700 -572
5600 4800 y -800 -672
Buy call at two higher strikes
strike price 490 strike price 5000

0 premium 26
premium 64 spot price 4910
spot price 491 intrensic 0
0 value
intrensic 10 time value 26
value
time value 54
125 | P a g e
nift stri exci gro net nift stri exci gro net
y ke se ss prof y ke se ss prof
spo pric (y/N prof it spo pric (y/N prof it
t e ) it t e ) it
430 490 n -64 -64 430 500 n -26 -26
0 0 0 0
440 490 n -64 -64 440 500 n -26 -26
0 0 0 0
450 490 n -64 -64 450 500 n -26 -26
0 0 0 0
460 490 n -64 -64 460 500 n -26 -26
0 0 0 0
470 490 n -64 -64 470 500 n -26 -26
0 0 0 0
480 490 n -64 -64 480 500 n -26 -26
0 0 0 0
484 490 n -64 -64 484 500 n -26 -26
6 0 6 0
490 490 y 0 -64 490 500 n -26 -26
0 0 0 0
500 490 y 100 36 500 500 y 0 -26
0 0 0 0
505 490 y 154 90 505 500 y 54 28
4 0 4 0
510 490 y 200 136 510 500 y 100 74
0 0 0 0
520 490 y 300 236 520 500 y 200 174
0 0 0 0
530 490 y 400 336 530 500 y 300 274
0 0 0 0
540 490 y 500 436 540 500 y 400 374
0 0 0 0
550 490 y 600 536 550 500 y 500 474
0 0 0 0
560 490 y 700 636 560 500 y 600 574
0 0 0 0
126 | P a g e
sell call at yet higher strike
nift strik exci gros net

y e se s profit
spo pric (y/N profi
t e ) t
430 5100 n 8 8
0
440 5100 n 8 8
0
450 5100 n 8 8
0
460 5100 n 8 8
0
470 5100 n 8 8
0
480 5100 n 8 8
0
484 5100 n 8 8
6
490 5100 n 8 8
0
500 5100 n 8 8
0
505 5100 n 8 8
4
510 5100 y 0 8
0
520 5100 y -100 -92
0
530 5100 y -200 -192
0
540 5100 y -300 -292
0
127 | P a g e
550 5100 y -400 -392
0
560 5100 y -500 -492
0
option
profits
46
46
46
46
46
46
0
-54
-54
0
46
46
46
46
46
46
option
profits
46
46
46
46
46
46
-54
-54
46
46 128 | P a g e
46
46
46
46
Long box
Buy a call Sell a put

strike price 4900 nift stri exci gro net
premium 64 y ke se ss prof
spot price 4910 spo pric (y/N prof it
intrensic 10 t e ) it
value 430 490 y -600 -536
time value 54 0 0
440 490 y -500 -436
0 0
450 490 y -400 -336
0 price
strike 0 4900
460
premium 490 y64 -300 -236
0 0
spot price 4910
470 490 y -200 -136
intrensic
0 0 0
value
480 490 y -100 -36
time
0 value
0 64
490 490 y 0 64
0 0
500 490 n 64 64
nift stri exci gro net 0 0
y ke se ss prof 510 490 n 64 64
t e ) it 520 490 n 64 64
430 490 n -64 -64 0 0
0 0 530 490 n 64 64
440 490 n -64 -64 0 0
540 490 n 64
129 | P64
age
0 0
550 490 n 64 64
0 0
560 490 n 64 64
0 0
0 0
450 490 n -64 -64
0 0
460 490 n -64 -64
0 0
470 490 n -64 -64
0 0
480 490 n -64 -64
0 0
490 490 y 0 -64
0 0
500 490 y 100 36
0 0
510 490 y 200 136
0 0
520 490 y 300 236
0 0
530 490 y 400 336
0 0
540 490 y 500 436
0 0
550 490 y 600 536
0 0
560 490 y 700 636
0 0
Buy a put Sell a call

strike price 5000
premium 122
spot price 4910
intrensic 90
value
time value 32
130 | P a g e
strike price 5000
premium 26
spot price 4910
intrensic 0
value
time value 26

y ke se ss profi
spo pric (y/N prof t
t e ) it
430 500 y 700 578
0 0
440 500 y 600 478
0 0
450 500 y 500 378
0 0
460 500 y 400 278
0 0
470 500 y 300 178
0 0
480 500 y 200 78
0 0
490 500 y 100 -22
0 0
500 500 y 0 -122
0 0
510 500 n -122 -122
0 0
520 500 n -122 -122
0 0
530 500 n -122 -122
0 0
540 500 n -122 -122
0 0
550 500 n -122 -122
0 0
560 500 n -122 -122
0 0
131 | P a g e
y ke se ss prof
t e ) it
430 500 n 26 26
0 0
440 500 n 26 26
0 0
450 500 n 26 26
0 0
460 500 n 26 26
0 0
470 500 n 26 26
0 0
480 500 n 26 26
0 0
490 500 n 26 26
0 0
500 500 y 0 26
0 0
510 500 y -100 -74
0 0
520 500 y -200 -174
nifty opti 0 0
spot on 530 500 y -300 -274
profi 0 0
ts 540 500 y -400 -374
"430 4 0 0
0" 550 500 y -500 -474
"440 4 0 0
0" 560 500 y -600 -574
"450 4 0 0
0"
"460 4
0"
"470 4
0"
"480 4
0"
"490 4
0"
"500 4
0"
"510 4
0"
"520 4
0"
"530 4
0"
"540 4 132 | P a g e
0"
"550 4
0"
"560 4
0"
Long iron butterfly
Sell a put
strike price 4800

premium 30
spot price 4910
intrensic 0
value
time value 30
133 | P a g e
y ke se ss prof
t e ) it
430 480 y -500 -470
0 0
440 480 y -400 -370
0 0
450 480 y -300 -270
0 0
460 480 y -200 -170
0 0
470 480 y -100 -70
0 0
480 480 y 0 30
0 0
490 480 n 30 30
0 0
500 480 n 30 30
0 0
510 480 n 30 30
0 0
520 480 n 30 30
0 0
530 480 n 30 30
0 0
540 480 n 30 30
0 0
550 480 n 30 30
0 0
560 480 n 30 30
0 0
Buy a put Buy a call
134 | P a g e
strike price 4900
premium 64
spot price 4910
intrensic 0
value
time value 64

y ke se ss prof
t e ) it
430 490 n -64 -64
0 0
440 490 n -64 -64
0 0
450 490 n -64 -64
0 0
460 490 n -64 -64
0 0
470 490 n -64 -64
0 0
480 490 n -64 -64
0 strike
0 price 4900
490 490 y
premium 640 -64
0 spot 0price 4910
500 490
intrensic y 10100 36
0 value0
510
time490
value y 54200 136
0 0
520 490 y 300 236
nift stri exci gro net 0 0
y ke se ss prof 530 490 y 400 336
540 490 y 500 436135 | P a g e
0 0
550 490 y 600 536
0 0
560 490 y 700 636
0 0
t e ) it
430 490 y 600 536
0 0
440 490 y 500 436
0 0
450 490 y 400 336
0 0
460 490 y 300 236
0 0
470 490 y 200 136
0 0
480 490 y 100 36
0 0
490 490 y 0 -64
0 0
500 490 n -64 -64
0 0
510 490 n -64 -64
0 0
520 490 n -64 -64
0 0
530 490 n -64 -64
0 0
540 490 n -64 -64
0 0
550 490 n -64 -64
0 0
560 490 n -64 -64
0 0
Sell a call at even higher strike
136 | P a g e
strike price 5000
premium 25
spot price 910
intrensic 0
value
time value 25

y ke se ss prof
t e ) it
430 500 n 25 25
0 0
440 500 n 25 25
0 0
450 500 n 25 25
0 0
460 500 n 25 25
0 0
470 500 n 25 25
0 0
480 500 n 25 25 option
0 0 profits
490 500 n 25 25 27
0 0 27
500 500 y 0 25 27
0 0 27
510 500 y -100 -75
27
0 0
520 500 y -200 -175 27
0 0 -73
530 500 y -300 -275 27
0 0 27
540 500 y -400 -375 27 137 | P a g e
0 0 27
550 500 y -500 -475
27
0 0
560 500 y -600 -575 27
0 0 27
nifty option
spot profits
"4300" 27
"4400" 27
"4500" 27
"4600" 27
"4700" 27
"4800" 27
"4900" -73
"5000" 27
"5100" 27
"5200" 27
"5300" 27
"5400" 27
"5500" 27
"5600" 27
138 | P a g e
IV. Bibliography
Websites referred:
a) NSE India – www. nseindia.com
b) BSE India
c) Wikipedia
d) Investopedia
e) Money control
Books referred:
a) Wealth Management – ICFAI University
b) Security Analysis and Portfolio Management – Prasanna Chandra
139 | P a g e
c) LIFFE Guide to Options Strategies
d) Options, futures, and other derivatives – John C.Hull
140 | P a g e

Project Vijay

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Project Vijay

Uploaded by

Copyright:

Available Formats

PART A:

INDUSTRY PROFILE OF ASSET MANAGEMANT/ INVESTMENT COMPANIES

Investments can be broadly classified into two types:

• Funding into equity from all over the world

• Corporate houses performance.

Equity market can be classified into two types they are,

INDIAN EQUITY MARKET:

At the end of Sensex YoY%change PE PBV

Yearly Sensex (BSE Sensitive Index) performance Source: economic times

Primary market consists of:

• QIPs: qualified institutional placements ; A designation of a securities issue given by the

• RIGHTS ISSUE: Issue of shares at par or at a premium by an existing company to its

New stock (share) issue offered to existing stockholders (shareholders) in proportion to

Amount raised (in rs crore)

Year IPO QIP RIGHTS TOTAL

Secondary market consists of:

– PRIVATE EQUITY/VENTURE CAPITAL

An individual who purchases small amounts of securities for him/herself, as opposed to an

Netinvestment in marketsrs'000' crore

PRIVATE EQUITY/VENTURE CAPITAL:

PMS: (portfolio management services)

The Participants in the derivatives market are:

MUTUAL FUNDS PARTICPATION IN DERIVATIVES MARKET:

Impact Analysis of Mutual funds participation in Derivative segment:

• Limited Loss Products:

• Index based products

• Fixed Income products

2. Greater opportunity for Retail Investors to avail advantage in Derivatives:

– Equity Derivatives in FIIs

Two crucial tax issues arise in use of equity derivatives by FIIs:

i. Tax character of profit or gain from equity derivatives contract − is it businessincome or

Fixed Income Derivatives in FIIs

Foreign Currency Derivatives in FIIs

2.1 Background and inception of the company:

2.2 Nature of the business carried

India Infoline Group

2.4 Products/service profile

A SEBI authorized Portfolio Manager; it offers Portfolio Management Services to clients.

India Infoline Investment Services Limited

2.5 AREA OF OPERATION

2.6 Ownership patterns

2.7 Competitors information

2.10 Work flow model

Under sell- the work flow model is as under

2.11 Future growth and prospects

3. Mckensy’s 7s frame work with special reference to organization under

• Internal factors - The strengths and weaknesses internal to the organization.

SWOT Analysis is used

5. ANALYSIS OF FINANCIAL STATEMENT

OPTION STRATEGIES ON NIFTY

i. Statement of the Problem

ii. Objectives of the Study

• To do a market study to understand the transaction costs involved in options

iii. Scope of the Study

iv. Methodology of Study

• Meeting brokers to understand the transaction costs in options

v. Limitations of the Study

II. Analysis/ Design/ Findings/ Observations of the Project

In the money option

At the money option

Out of money option

The strike price is often called the exercise price.

The trade: Buy a call with an exercise price of (A).