Derivatives PPT 2022

International School of Financial Markets Derivatives Market Module Reg. office : Plot no. 152 - P (LGF), Sec – 38, Medicity Road, NR Medanta Hospital Phone : 0124-2200689, +91 7015237224, +91- 8168573253, +91 8368025252 Web: www.isfm.co.in , Email : [email protected]

Derivatives An

nalysis Course

Introduction to Derivatives



Name Email Id Mobile No. Sr. No. Session Name Sub Topics What is Derivatives Market, Structre Market, What is Stock Exchange 1 Introduction to Derivatives Participant of Derivatives Market and Market How to understand Index Niftya and B What is major diffrence in Equity and Classification of Derivatives market What is Future trading in stock marke Major Terminology you need to unde Index calculation formula 2 Understand of Future Market How to calculate fair value of future What is open interest in stock market How to interpert open interest for liv Ho to understand MTM in stock mark How to use index for live trading 3 Future Market Live Trading Ho to pur order in live market Session How to understand MTM in practical Basics rules and regulation for trading Introduction to Options trading What is difference between future an Terminology of options trading 4 Options Trading Moneyness of options trading Live Example of Call and Put for tradin How to read open interest in options Options payoff settlement in live mar

Course Name DD……...MM……...YY……….. Batch No. Remarks Duration Time Presented by of Derivatives 2 Hours Sushil Alewa d their roles Bank Nifty 2 Hours Sushil d Derivatives Alewa et erstand t ve trading ket 2 Hours Anil Mor trading 2 Hours Sushil g Alewa nd options ng trading rket

How setup options trading setup in yo How to put options trading orders in 5 Live Options Trading Live How to put stop loss in options tradin Trading Session How to check options open interest in How to find support and resistance us How to check time value and internsi How to use leverage in Derivatives M What is open interest interpretation How to read option chain in live mark What is PCR ratio and its interpretatio 6 How to Analyze Future and What are Options Greeks in stock ma Options How to understand Greeks in live ma How to make profitable trading strate How to use future and options data to How do get free data from market fo Pure practical session 7 Options Trading live Session * Please carry your laptop everyone for participants Everyone must have demat a/c befor Live options trading with virtual accou What is Synthetic long call strategy 8 Bullish Trading Strategy What is covered call trading strategy What is Bull Call spread trading What is Bull put trading strategy 9 Live Trading Session for Bullish How to Implement strategy in Trading Strategy

our software n live market ng n live market 2 Hours Anil Mor sing options chain ic value in live market Market ket 2 Hours Sushil on Alewa arket arket egy using Greeks ogether r live trading re joining session 2 Hours Anil Mor unt in Market 2 Hours Sushil Alewa n live market 2 Hours Anil Mor

What is Short Straddle Trading Strate What is Long Straddle Trading Strateg What is Short Strangle Trading Strateg 10 Flat Trading Strategy What is Long Strangle Trading Strateg What is IRON Condor trading Strategy What is Reverse IRON Condor What is Long Call Butterfly Trading St What is Short Call Butterfly Trading St 11 Live Trading Session for Flat How to Implement strategy in Trading Strategy What is Protective Put Trading Strate 12 Bearish Trading Strategy What is Covered Put Trading Strategy What is Bear Put Spread Trading Strat What is Bear Call Spread Trading Stra 13 Live Trading Session for Bullish How to Implement strategy in Trading Strategy

egy 4Hours Sushil gy ( Two Alewa gy Session gy y s) trategy 4Hours Anil Mor trategy ( Two Session n live market s) egy y 3 Hours Sushil tegy (2 Alewa ategy n live market Session ) 2 Hours Anil Mor

What are Derivatives  Derivative is a product whose value is derived from the valu index, or reference rate), in a contractual manner. The unde  For Example : Curd price is depend on Milk, Sugar price de  In the Indian context the Securities Contracts (Regulation) Ac  (SC(R)A) defines \"derivative\" to include-  1. A security derived from a debt instrument, share, loan wh  unsecured, risk instrument or contract for differences or any  of security.  2. A contract which derives its value from the prices, or inde  underlying securities.  Derivatives are securities under the SC(R)A and hence the tr  derivatives is governed by the regulatory framework under

ue of one or more basic variables, called bases (underlying asset, erlying asset can be equity, forex, commodity or any other asset. epend on Sugar cane. ct, 1956 hether secured or y other form ex of prices, of rading of r the SC(R)A.

Difference in Equit 4 Equity Market  You need 100% money to trade.  You are the owner of the securities.  You have no time limit to sell the securities.  Brokerage rate are different in intra day and delivery.  You are liable to get dividend on share if you are having in your portfolio.  You can buy a single share also if want to buy.

ty & FO Derivatives Market  You need just 10% money to trade.  You are hiring the stock.  You have to settle within time limit given.  Brokerage would be same.  You are not liable to get dividend.  You have to buy lot not a single share. www.isfm.co.in 23 May 2022

Major Products



Futures Forwa Deriva Opti

wards atives Swaps ions 6 23 May 2022

Buyer Mo Sec  Clea A (Buyer)

oney Seller curities aring House B 7 23 May 2022 (Seller)

Difference between Future a Future  Buyer & Seller don’t know each others.  Contract are standardized.  MTM settled on daily basis.  No third party risk due to exchange availability.  Expiry date is decided in advance and will not change  Only cash settled.  Legal existence is there.

and Forward Forward  Buyer & Seller know each others.  Contract are customized.  No need for MTM.  Third risk is high because no one is intermediate.  Expiry date is decided by mutual consent.  Physical settlement in mostly cases.  No legal existence.

Products in Derivatives M  Products in Derivatives Market Forwards  It is a contractual agreement between two parties to buy/sell an unde pre‐decided on the date of contract. Both the contracting parties are price of the underlying asset at the time of delivery. Since forwards a contracts are customized. These are Over‐the‐counter (OTC) contracts  Futures  A futures contract is similar to a forward, except that the deal is made negotiated directly between two parties. Indeed, we may say futures  Options  An Option is a contract that gives the right, but not an obligation, to b price. While buyer of option pays  the premium and buys the right, writer/seller of option receives the p exercises his right.  Swaps  A swap is an agreement made between two parties to exchange cash broadly speaking, series of forward contracts. Swaps help market pa exchange rates and commodity prices.

Market erlying asset at a certain future date for a particular price that is e committed and are obliged to honor the transaction irrespective of are negotiated between two parties, the terms and conditions of s. e through an organized and regulated exchange rather than being s are exchange traded forward contracts. buy or sell the underlying on or before a stated date and at a stated premium with obligation to sell/ buy the underlying asset, if the buyer h flows in the future according to a prearranged formula. Swaps are, articipants manage risk associated with volatile interest rates, currency

Major Participants



Market Participants  Hedgers  They face risk associated with the prices of underly Corporations, investing institutions and banks all use to market variables such as interest rates, share va commodity prices.  Speculators/Traders  They try to predict the future movements in prices o in derivative contracts. Derivatives are preferred o leverage, are less expensive (cost of transaction is faster to execute in size (high volumes market).  Arbitrageurs  Arbitrage is a deal that produces profit by exploit markets. Arbitrage originates when a trader purch arranges to sell it at a higher price in another loca long, since arbitrageurs would rush in to these trans

ying assets and use derivatives to reduce their risk. e derivative products to hedge or reduce their exposures alues, bond prices, currency exchange rates and of underlying assets and based on the view, take positions over underlying asset for trading purpose, as they offer generally lower than that of the underlying) and are ting a price difference in a product in two different hases an asset cheaply in one location and simultaneously ation. Such opportunities are unlikely to persist for very sactions, thus closing the price gap at different locations.

Understanding Index



Understanding of Index  What is Index :  Index is the barometer of the mar well diversified so that it can represent the market.  In India the most popular indices have been the BSE Sen comprising the index which are selected based on marke It represents 30 large well-established and financially so  The Nifty index consists of shares of 50 companies with crore.  Major Indices in India :  SENSEX  NIFTY  BANK NIFTY  VIX  CNX IT

rket. It reflect the change in the market. A good index must be nsex and S&P CNX Nifty. The BSE Sensex has 30 stocks et capitalization, industry representation, trading frequency etc. ound companies. h each having a market capitalization of more than Rs 500

Equity Market 14

Current level : 18000 No. of listed co : 1650 Timing : 9:00 am to 3.30 pm Duration : Monday to Friday PE Ratio : 26 Market cap : 3.8 T 52 week H / L : 18604 : 12730 Website : www.nseindia.com www.isfm.co.in 23 May 2022

Nifty 50 Weight % 15

% www.isfm.co.in 23 May 2022

Nifty – 50 Weight 16

tage & Beta www.isfm.co.in 23 May 2022

Nifty – 50 Weigh 17

htage & Beta www.isfm.co.in 23 May 2022

Trading Frequency

y

Sensex 19

Current level : 60008 No. of listed co : 5400 Timing : 9:00 am to 3.30 pm Duration : Monday to Friday PE Ratio : 28 Market cap : 3.8 T 52 Week H/L Website : 62245 / 43453 : www.bseindia.com www.isfm.co.in 23 May 2022

How Index Calculated  Index can be calculated  Current Market Capitaliz  Base Market Capitaliza

by : Base Value zation ation

Major Indices in World



City Wise Turnover in Ind