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The derivative contracts in the below mentioned security has crossed 95% of the market-wide position limit and are currently in the ban period.

Securities in Ban For Trade Date 20-February-2009Â
AKRUTI
EDUCOMP

Indian Market News, news Akruti, ban, Educomp, FNO, fno ban stoks

Educomp stock saw huge volatility in today’s trade on the news that company promoters sold 5% stake and showing higher fixed assets.

The company clarified that the promoter sold 5% in last 3years and not shown any higher fixed assets.

The share price which plunged to as low as 1915.20 on BSE and touched high of 2073 finally closed at 1969.

The Jan future contract of the Educomp is quoting at 1814. which is almost Rs.155 discount

Indian Market News, news Educomp, FNO

NSE has decided to remove Satyam Computers from equity derivatives segment. Thus, fresh month contracts will not be introduced for the expiry month April 2009 on the expiration of January 2009 contracts.   All existing contracts i.e. contracts with expiry dates February 26, 2009 and March 26, 2009 will expire on January 29, 2009. Accordingly, no futures and options contracts will be available in the underlying SATYAMCOMP for trading from January 30, 2009 onwards.
 The security will continue to be available for trading in the capital market segment. (Cash Segment)

Indian Market News, news FNO, satyam

Options are different from forward and futures contracts. An option gives the holder of the option the right to do something. The holder does not have to exercise this right. Unlike, in a forward or futures contract, the two parties have committed themselves to doing something. Whereas it costs nothing (except margin requirements) to enter into a futures contract, but the purchase of an option requires an up-front payment called premium.

For the buyer of the Options the loss is limited to the amount of premium he has paid to buy the options. Where as the in futures contracts the holders of the contract is exposed to unlimited loss or profit.

Buyer of an option: The buyer of an option is the one who by paying the option premium buys the right but not the obligation to exercise his option on the seller/writer.

Writer of an option: The writer of a call/put option is the one who receives the option premium and is thereby obliged to sell/buy the asset if the buyer exercises on him.

Call option: A call option gives the holder the right but not the obligation to buy an asset by a certain date for a certain price.

Call options can be used if one has the bullish view underlying

Put option: A put option gives the holder the right but not the obligation to sell an asset by a certain date for a certain price.

Put options can be used if one has the Bearish view on the underlying

Option price/premium: Option price is the price which the option buyer pays to the option seller. It is also referred to as the option premium.

Futures and Options Tips, Indian Market News, news calls, FNO, Options, puts

In it’s periodic reviews of contract size/value of derivative contracts based on prescribed minimum value of INR 200,000 as per SEBI circular no. SEBI/DNPD/CIR-20/2004/02/23 dated February 23, 2004.   It is proposed to carry out revision of market lots for derivatives contract as given below:

List of underlying in which market lot is being revised downwards

FNO Lot Size Revised Downwards

List of underlying in which market lot is being revised upwards:

 To avoid operational complexities, in case 2 above, only the far month contract i.e. March 2009 expiry contracts will be revised for market lots. Contracts with maturity of January 2009 and February 2009 would continue to have the existing market lots. All subsequent contracts (i.e., March 2009 expiry and beyond) will have revised market lots.

Futures and Options Tips, news FNO, Futures and Options Tips, New Lot size

The derivative contracts in the below mentioned securities have crossed 95% of the market-wide position limit and are currently in the ban period. It is hereby informed that all clients/ members shall trade in the derivative contracts of said securities only to decrease their positions through offsetting positions. Any increase in open positions shall attract appropriate penal and disciplinary action in accordance with the Circular No. NSCC/F&O/C&S/365 dated August 26, 2004.

 Sr.No. Symbol
1 ADLABSFILM
2 BINDALAGRO
3 ESSAROIL
4 IVRPRIME
5 ORCHIDCHEM
6 PARSVNATH
7 RAJESHEXPO

Futures and Options Tips ban list, F&O, FNO, Security list

The derivative contracts in the below mentioned securities have crossed 95% of the market-wide position limit and are currently in the ban period. It is hereby informed that all clients/ members shall trade in the derivative contracts of said securities only to decrease their positions through offsetting positions. Any increase in open positions shall attract appropriate penal and disciplinary action in accordance with the Circular No. NSCC/F&O/C&S/365 dated August 26, 2004.

1 ADLABSFILM
2 ARVINDMILL
3 BINDALAGRO
4 ESSAROIL
5 GMRINFRA
6 IFCI
7 ISPATIND
8 IVRPRIME
9 JPHYDRO
10 NAGARFERT
11 PARSVNATH
12 RNRL
13 RPL
14 SRF

Futures and Options Tips, Indian Market News ban list, F&O, FNO, securities list

Short term trader can buy L&T Jan futures with stop loss 4050 for target price of Rs 4450 and 4500.

after the run up fr0m 2900 to 4690 the stock has been trading in the range of 4000 and 4400. The stock may give break out in the week.

Futures and Options Tips, Stock Tips FNO, fno tips, Futures, L&T, Trading Calls

What is Derivatives?
As the name suggests, derivatives are products whose value is derived from some other product. For example, the price of curd depends on the price of milk, because curd is a product derived from milk. In this example, the curd is the derivative and milk is the underlying.

Definition: Derivative is a product whose value is derived from the value of one or more basic variables called bases (underlying asset, index, or reference rate), in a contractual manner. The underlying asset can be equity, forex, commodity or any other asset.

Underlying Asset: In the financial markets, the underlying asset can be a stock, an index, foreign currency or any commodity like wheat, rice, gold and so on.

Derivative: In the financial markets, the derivative is a contract between two parties to buy or sell the underlying at an agreed price at a future date.

Why would anyone enter into a contract to buy/sell at a future date?
This practice is prevalent since centuries ago. So as a matter of fact, derivatives are not an invention of the modern economy but a practice passed on by our forefathers. In the past, farmers used to worry if they would find any buyers for their produce. At the same time, the traders used to worry if they would find food grains at an affordable price during the harvest season. So in order to reduce their risk, the farmers and the traders used to enter into a verbal contract before the harvest season. The trader would agree to buy the entire harvest at a future date at a pre-agreed price. Such a contract is called a forward contract. There were no standard terms and conditions of such contracts. The terms were mutually decided.

Need for a standardized market:
Now imagine a situation, if the trader wanted to back-out of the contract. He would have to find some other trader who would agree to honor the terms and conditions of his contract and transfer the contract to him. Since, the terms are mutually decided, it would be difficult for the farmer or the trader to find someone else to whom they could transfer the contract.

Would’nt it be wonderful, if the terms and conditions in such forward contracts were standardized and such contracts be traded in a market! This is where the exchange comes in. The exchange allows trading of contracts which have standardized terms and conditions, so that no two contracts are different. Such standardized forward contracts are called futures.

The exchange along with other financial institutions acts as the intermediaries between the two parties entering into the contract. The exchange has many safeguards which reduce the risk of one of the parties not honoring the contract.

Indian scenario:
The Indian Stock exchanges allow for trading in two broad types of contracts viz., the futures and the options. The underlying assets allowed are selected stocks and selected indices.
So we have the following types of contracts which can be traded on the Indian stock exchange:

1. Stock Futures
2. Index Futures
3. Stock Options
4. Index Options

What are the standardized terms of a derivative contract?
Few of the important terms which a derivative contract must have is:

Expiry Date: The exchange prescribes an expiry date for each contract. Expiry date is the future date on which the actual buy/sell transaction takes place between the two parties. In the Indian market, all contracts have a life-span of 3 months and expire on the last Thursday of the 3rd month.

For example, a contract introduced in January will expire on the last Thursday of March and a contract introduced in February will expire on the last Thursday of April and so on.

A March contract is a contract which expires in March but which was introduced for trading 3 months back in January. As a result, there will always be 3 different month contract trading on the stock exchange at any point of time.

Lot size: Lot size is the minimum quantity of shares in case of stock derivatives and units in case of index derivatives which must be bought/sold in 1 contract.

You can find a complete list of stocks along with their lot sizes which are currently allowed to be traded in the derivatives segment on the National Stock Exchange at http://www.conceptconsultants.info/derivatives/derivativelist.asp

Summary:
Derivatives are basically hedging products, which mean they are used to reduce the risk from future price fluctuations. It is a contract between two parties who agree to buy/sell an underlying asset at a pre-agreed price at a fixed future date called expiry date. Such a contract, which has standard terms and conditions specified by the stock exchange, is called a futures contract. This contract can be actively traded on the stock exchanges.

Futures and Options Tips FNO, Futures, Futures and Options Tips, Options