Call option trading 8880

Given an expected oversupply of hybrid bonds on the FI side, how can lesser known players best position themselves to catch investor attention? What is motivating issuances of corporate hybrids? How do hybrids fit into senior unsecured investment strategies? To what extent do hybrids offer realistic scope for portfolio diversification and multinational corporate exposure for investors? Will this help to move product in a distinctly institutional direction? Highlighting differences on jurisdictional interpretations of European regulatory guidelines: How does this affect CoCo issuance patterns? Morning refreshments and networking break 11. Comparing the US and Europe: Which market is more conducive to providing fertile ground for innovative products like hybrids? Rating agency treatment as market makers: Are further hiccups to be expected? Afternoon refreshments and networking break 16. Discussing asset managers launches of specialised CoCo funds.

Is the market moving toward an integrated issuance approach? Do investors understand risks enough? The conference will divide into two separate streams on FIs and Corporates, evaluating drivers for both of these distinct, yet interlinked markets. How safe is it to hold CoCo assets in the long term? How do issuances in different jurisdictions in Europe differ? How are banks assessing asset disposal as a feasible alternative? Will growing success of the product attract more institutional investors?

As the market matures, will investors be willing to invest in riskier, lesser known issuer hybrid deals? How would rating agencies like to see corporate hybrids develop with a view of establishing a reliable product? How are rating agencies reassessing hybrids and what metrics will be key in rating decisions going forward? Additional Tier 1 capital attractiveness: How do CoCos fit into the capital structure? Where does the market expect most activity? To what extent can the introduction of risk based capital regimes improve insurance hybrid attractiveness? How do hybrids fit into restructuring stories? What are the implications for investors? To what extent are tax treatment benefit decisive for hybrid issuances?

What are the potential growth areas for corporate hybrids? Pricing of corporate hybrids: What factors determine the spread of hybrids? Is pricing competitive enough to make the product attractive investment despite extensive risk analyses requirements? Alternatives to CoCos: What other options do financial institutions have to meet regulatory requirements? Moderator: Cecile Bidet, MD, Ratings Advisory Group, Societe Generale 10. Is regulation expected to change? How are investors judging call option uncertainty?

Where does their competitive advantage lie? How is continued monetary tightening in Europe influencing debt financing methods? Rating financials: How are rating agencies assessing CoCos and is widespread rating for financials a feasible expectation? Bonds vs loans: Can the Hybrid product contribute to making bonds more preferable as a whole? That number works out to 65. profit access to weekly reports with featured information for stock options enthusiasts. For the various different available expirations for AAOI options, SEMG options, or CGNX options, visit StockOptionsChannel. Crude oil inventory data tonight from US will be watched keenly as US markets fell yesterday due to Crude oil price fall. Nifty future is likely to trade between 8780 and 8880. GNA Axle public issue was oversubscribed by more than 50 times and HINI category was subscribed by more than 200 times.

Fed deputy governors were giving conflicting signals about rate hike. But on Monday both our markt and US market were closed for holidays. Today markets may react to WPI Inflation data also which will be released around 12 noon. Nifty 8600 Put shold be held as long as Nifty future trades above 8700, once Nifty future breaks 8700, Nifty 8600 Put should be shifted to Nifty 8400 Put. Anil Ambani stocks are buzzing. But FIIs and DIIs are both net sellers in Cash market. After WPI inflation data, there are no important economic data until the end of this expiry, except US rate hike news.

One can sell Nifty 8600 Put and 9000 Call to ride the volatility. This happens 4 times in a year. The fall in Yes Bank affected the other private sec tor banks and hence Bank Nifty closed flat. Heavily beaten down stocks like Axis Bank, Tata Motors in this series may see some short covering. It is not going to see huge subscriptions but retail people are showing interest. SGX Nifty is trading around 8880, about 80 points higher. FIIs have turned net buyers in Cash market though DIIs continue to sell in huge quantities. Weekly expiry of Bank Nifty options will also add to the volatility.

Third, since FIIs have turned net sellers, traders may look to book profits on their long trade. They are selling options to make some profits due to time value. Auto stocks may lead the next bull run. We may see very good action today in our markets. Auro Pharma broke out yesterday after a long consolidation. After huge buying spree on Wednesday, FIIs resorted to some short selling in stock futures on Thursday. As long as Nifty future is trading above 8750, this is just a normal correction.

So buy on dips method will be good now. Few months before, Nifty was trading between 7700 and 8000 with huge volatility. First it was Yes Bank, then it was Axis Bank and yesterday it was ICICI Bank that came under huge selling pressure. It is interesting to see that Nifty is at 52 week high and IT index is at 52 week low. Today evening, US jobs data will be released and that will be the key event of this month. Second, Banking stocks fell as the chances of rate hike keeps going down and that is also good for India. New issue GNA axle will be listed today and is likely to do very well due to huge subscription levels. Generally IT stocks will drag the markets.

But Japan has the history of uncertain outcomes. SGX Nifty is trading about 25 points higher. US markets closed significantly higher. Nifty future may take support at 8920. This huge gap up will wipe out many short sellers. It was around 13500 on February 29. That has exactly happened. Today is Friday, markets may make some sharp moves on either side towards the end of the day.

That was the reason for such a drastic fall in Axis Bank. So our markets should stabilise. SGX Nifty also shot up from the intraday low of 8676 to 8750. Yesterday markets consolidated as expected. Yesterday Volatility index closed around 13, the last time it happened in December 2014. Any dip will an opportunity for traders to go long. But we need to ignore these abnormal figures as these figure are due to Castrol selling shares worth Rs 1900 crores. Today is going to be a really very bad for the following reasons.

Core sector growth also came lower. As I stated earlier, Nifty may trade between 8700 and 9000 and may breakout towards the end of the series as happened in the last few series. Traders may square off their trades ahead of week end holidays. October series has only 18 trading sessions. Resitance will be at 8850. This sudden fall on Monday took out all the weak bulls out of the market. Dow futures shot up to trade 100 points higher from 30 points lower, recovering about 130 points.

Nifty future may take support at 8780. SGX Nifty is trading above 8800, right now at 8805. China Manufacturing PMI came higher than 50 which shows that China economy is expanding not contracting. SGX Nifty closed about 80 points lower in Singapore on Friday night 11. But to it may continue to fall due to global cues. But for India the fall in Crude is actually good news but on day to day basis markets will react to global cues. Selling pressure may be there until 15th September due to advance tax issues. The morning rise was due to short covering.

Friday, today it will cross 20000. Nifty fell just 11 points but Nifty future shed lot of premium during the day. There are some stock specific news like Infosys is likely to cut the guidance for the next quarter, Arundhdhi Bhattacharya is likely to get extension as SBI Chairman etc. If Global markets fall tomorrow and if IIP and Inflation data are bad, then probability of another big gap down on Wednesday is very high. Nifty traded within a very small range of 34 points. But later in the day, when news broke out that Iran was not in agreement to freeze the Crude output, markets started falling.

Markets may trade rangebound in the morning but expect some sharp moves either side towards the end of the day. DIIs however continue to sell in Cash market. But DII buying was more at Rs 308 crores. Today Asian markets are mostly flat after of trending higher for more than a week. Reliance is moving higher and that is saving the market from collapsing. So the fear of retaliatary attack will be there for many more days and hence people will not be willing to go long. This month markets are highly volatile, yet traded between 8700 and 9000. FIIs are turning as net sellers in Cash market and they have sold for Rs 299 crores on Friday. So it is not only our markets, all markets are volatile.

SGX Nifty is flat at 8880. The problem will start if Nifty future breaks 8680. Expect consolidation today after huge rally yesterday. But drastic fall in some scripts like Yes Bank, Axis Bank, Infosys make DIIs to be active in Cash market. FIIs seems to be buying still in Cash market. Clearly Banking stocks lost the leadership. Fourth, as long as long term investors do not get panic, it is ok. Nifty future may trade between 8880 and 8980. SGX Nifty is also volatile. Yesterday FIIs were net sellers in Cash market for Rs 301 crores.

Nifty future may trade between 8760 and 8840. Hope Nifty expires below 8850 and Bank Nifty below 20000. On the other hand, if Nifty future breaks below 8700, there will be more selling. If the subscription figures are good, then ICICI Bnk will move higher and hence the Bank Nifty. ICICI Bank was up. India Services PMI came higher, close to 55 is a positive news. This has happened when every technical analysts was bearish. Yesterday Nifty future low was 8717.

But anytime, Bank of Japan announcement can come and markets may move accordingly. Nifty future is expected to trade between 8820 and 8920. Bank Nifty 20000 Calls. But that needs some more trigger. Yesterday though our markets were firm, Banking stocks under performed the broader markets. Markets are likely to be volatile ahead of expiry.

So Asian markets are mostly down. Yesterday after Presidential debate, markets recovered all over the world. Nifty future may trade between 8680 and 8780. Corporate results season has almost come to an end. ICICI Bank share price will move according to ICICI Pru. If Nifty future trades firmly above 9020, then 9150 will be the next target.

Later Dow fell another 150 points. Fed decision is more or less known, Fed is expected to keep the rates unchanged but will give hawkish comments to indicate the December hike. After that Nifty future has not crossed that number. Yest markets can fall like this. So Private Sector Banks, Autos, Pharma may lead the rally. US markets closed almost flat after opening firmly in Green. If Nifty spot moves below 8545, then Nifty may fall another 150 points.

Reliance was at Rs 1600 when Nifty was at 6300 in 2008 but now when Nifty is close to 9000, reliance is still around 1020. Rs 50 Lakhs for my clients on Monday but recovered about Rs 35 lakhs in the next two days. So by looking at the trade setup, our markets are likely to move higher with volatility due to Fed meeting and BoJ meeting. Dow fell nearly 200 points from intraday high. Nifty future may find resistance around 8920. Hong Kong, China, South Korea markets are closed.

Few weeks before, in one of the financial website forum, I mentioned that I am bullish. SGX Nifty hit a high of 8930 yesterday. People suspect that to be a consequence of Nuclear test by North Korea. Today, though Bank Nifty is likely to open gap up by more than 200 points, this Call option premium will come down. If Nifty future trades firmly below 8720, then next target will be 8680. The fall in Nifty was mainly due to Telecom stocks which fell due to Jio announcement. Between 29th August intraday low and 31st August intraday high, Nifty future was up by 285 points. Though markets are weak, things look bullish in the next series. So short sellers be aware of the risk.

So Oil and Gas sector helped the world markets to recover from their multi week lows. Second, that was the lowest level in August series. SGX Nifty opened around 8680 and hit a low of 8676 within few seconds. Today YES Bank may come under pressure due to SEBI investigation. Going by the options data Nifty is likely to trade between 8800 and 9000 in the short term. Then some stock specific news like Rel Infra fell due to notice from DRI, YES Bank fell due to failed attempt of QIP, etc.

Usually next month Nifty future will trade at a premium of 30 to 40 points but now trading at 45 points premium. Today Nifty future may trade again between 8720 and 8820. Tata Motors may move higher today. We can expect Nifty to expire above 9000 this expiry. Second, our markets are likely to see a considerable gap up or gap down on Tuesday due to US jobs data which will influence the world markets significantly. Resistance will be at 9020. Yesterday most of the applications came from retail people. May be after the FOMC meeting in the fourth week of September.

US markets closed lower. Even the Call option premiums may not shoot up much except for first 10 minutes. FIIs have sold heavily in futures market. Asian markets are cautious ahead of BoJ and Fed meetings. But they have sold heavily in stock futures. In fact if you remove IT stocks, we are already at all time high.

So our markets also fell and Nifty future broke the series low of 8717. There is every possibility of huge two way movement in the markets on Wednesday and Thursday. This fear will drive the markets further down. US arkets also closed almost flat after a volatile session ahead of BoJ and Fed policy. As expected, Pakistan has not retaliated immediately. Many people wrote against me, one of them has even accused me that I am manipulating the markets. So the resistance will come around that level. Bank Nifty has already fallen by 1000 points in the last few days. Banking stocks were up and US markets were dragged down by Apple.

US markets closed lower on Friday. That is good for India but not good for world markets. We also need to watch the subscription figures of ICICI Pru. On Monday Nifty future low was 8727. DIIs have sold heavily in Cash market. European markets closed lower as expected extension of bond buying was not announced by ECB Chairman. Tata Motors has declared a good JLR sales figure also. On Monday Nifty future opened gap down at 8805. This comes after historically low VIX and very narrow movements for more than a month.

Other Asian markets are higher following US. Fed policy was in line with expectation. Resistance will be at 8880. In index and Stock futures, FIIs are almost neutral. US markets closed marginally lower. SGX Nifty is trading around 8805, almost flat after opening lower. Markets may correct only after hitting 9000 or all time high. First, the GDP data that came lower than expected figure.

US markets were volatile and closed mixed. There are tworeasons why Nifty future could not kiss the 9000 figure. Yesterday Banking stocks helped the Nifty to rise. That is spooking the otherwise bullish Asian markets. Nifty future hit a low of 8727, then recovered a little bit. Markets may consolidate in a narrow range. So due to these developments Banking index is under performing which is a leading sector. So selling Put option and squaring up once Nifty crosses 9000 may be a good method now.

Yesterday Private sector jobs data came in line with expectation. First, very bad Global cues due to rate hike fear, though the probability is very low for September hike. This is my expectation. Our market volatility is much more because of military operationin PoK. If these TCS and Yes Bank news were not there, Nifty future would have crossed 9000 comfortably. There may not be any stock specific movements.

The fear of another big gap down today has not materialised and hence India VIX may cool off a little bit. Both Nifty future and Bank Nifty future premiums have come down. FIIs have bought options worth 5578 crores and clearly this reflects the fear in the system. Yesterday FIIs have bought for about 3400 crores in Cash market and DIIs have bought for Rs 1630 crores. Fouth, as a contrary trade, some people who look to buy shares in huge quantities may use this kind of opportunity to buy shares in huge quantities without altering the prices. So any recovery will be used as an opportunity to short the market. But Fed meeting and BoJ meeting will bring volatility to the markets.

DIIs are not buying aggressively, means they are expecting the markets to come down further. Today also most Asian markets are trading slightly higher and all markets are holding. FIIs seems to be a confused lot, one day buying and one day selling. IT stocks are not showing any improvement. But this time volatility is higher. Nifty should not break 8545 for three resons. If Nifty future trades firmly above 8920, then it is matter of time Nifty future will test 9000. The day before expiry is usually high volume day and market movement is very difficult to predict.

SGX Nifty is about 50 points lower. Auto stocks will be in focus after hefty price hike of petrol and diesel prices. Pharma stocks are showing some momentum. Markets hit all time high in March 2015. So we are likely to out perform the other markets today. Due to huge gap up, short sellers will have no chance to come out with stop losses. That will stop from today as they go for Silence period from today where nobody is allowed to speak about rate hike. So we can ignore that fall.

Dow was down by 250 points. So markets may move according to global cues. Yesterday US markets fell mainly due to two reasons. Hence markets went up in US. Wednesday until FOMC decision is clear. Worst still, Put option buyers. Third, tomorrow is a holiday.

That is a very good news for ICICI. Most Asian markets are trading between Green and Red. Until then Nifty will be highly volatile between 8700 and 9000. SGX Nifty is trading almost flat due to uncertanties like Reliance issue, Cement issue, petrol price hike, not so good global cues, etc. Dow futures was trading 30 points lower. First, profit warning by TCS and TCS fell dragging all the IT stocks.

We all know what happened during that time between January 2015 and March 2015. Reliance INfra, Jubiliant Food will be in focus due the corporate news. Another big event is US jobs data tomorrow. Cement stocks will be in limelight due to penalty of more than 7000 crores by CCI. TCS will come under pressure due to profit warning. US markets closed significantly lower ahead of Presidential debate. Calls and 8700 Puts. Yesterday markets moved as expected.

Usually last breakout level should become support level in the next leg. One thing is very clear, markets have brokenout decissively. IPO from retail people. Yesterday we have under performed the world markets. Wednesday and Thursday are two important trading days for the world markets. But that may not be a big negative for our markets. Nifty future is likely to trade btween 8760 and 8860. Hope to recover the remaing losses by today.

India Manufacturing PMI data will be released. If markets fall, then that will be the better time to buy Call options. It is difficult to predict a range for Nifty future ahead of BoJ. As long as 8680 is not broken, we can expect some stability. Today evening IIP and Inflation data are due. Markets will keenly watch ICICI Pru. Usually China is the party spoiler when markets are at peak, now the data from China is not bad. Most analysts say that BoJ policy decision is more important than Fed policy decision.

Market is still behaving in a rational manner, in my opinion. In my opinion, if BoJ comesout with Dovish policy, markets will shoot up and then tomorrow markets will fall after Fed policy. Today there is no specific stockwise reason for market fall, all stocks will fall a bit but the impact will be higher in Nifty. SInce Nifty has shot up from 6800 to 9000, a lot of investors are sitting with huge profits and if they start booking profits, then only real problem will start. So markets may go for consolidation. Many Asian markets are closed like China, Taiwan, South Korea. FIIs have sold but DIIs did not buy. Reliance and IT stocks are saving the markets. But Crude prices are stabilising now.

Auto and Cement stocks will also be in focus due to monthly sales data. We can expect some short covering rally as our markets are down from about 9000 level. It seems that there is good response for ICICI Pru. ITC, Reliance, Infosys saw some good amount of short covering yesterday. But one time when markets fell below 100 DMA, Nifty fell another 500 points before recovering. Yesterday both FIIs and DIIs bought for over Rs 300 crores each. Monsoon rain is not above Long Term Average as expected. FIIs bought Rs 875 crores worth of future but sold only Rs 137 crores in stock futures. Yesterday it went very close to 9000, a magical figure for the short term.

Most of the time the series close at the lowest point of the series in this kind of senario. So the chances of September rate hike has gone down. SO our markets also opened firmly higher. SGX Nifty is almost flat at 8808. Tata Motors and TVS motors will be in focus after monthly sales figures. ICICI will be in focus ahead of ICICI Pru. Anil Ambani stocks will also be in focus. This will be good for banking stocks, banking stocks may stabilise and may not fall severely from here.

IT stocks and Reliance were up despite such a bad fall. Most Asian markets are cautiously optimistic. Markets may consolidate for few weeks and may try to move higher in October. So markets are not likely to recover in the short term. We have taken support at 100 DMA in the past 6 out of 7 times. First, Real estate stocks like HDIL, DLF etc, they fell due to poor corporate results declared during the weekend.

Though IT and Private Sector Banks fell, Reliance, Auto stocks and Pharma stocks contrbuted to the rally. Since Nifty future resistance was 8750 few days before and markets have brokenout, now 8750 will become a strong support. Midcap index is already at all time high. Markets are entering the turbulent period and this period will last until US election results. We have to worry only when Nifty future start trading below 8750. Expiry day trade will be difficult to predict.

So SGX Nifty is trading around 8760. Auto stocks are still bullish, Maruti is close to 52 week high. But all these are not relevant once Bank of Japan announces its policy. Media stocks were in limelight yesterday. Time for party day for bulls. Nifty future fell last Monday from 8900 level. Even the Volatility index also indicates the same. Highest open interest among Puts is at 8500 and Calls is at 9000, same as last month. Other markets are almost flat with some positive and some negative bias.

We need to see whether that 8700 holds for the rest of the series. Non stop run up in Nifty of more than 2000 points form February low and FCNR redemption of about 30 billion dollars in September make risk reward ratio not in favour of bulls right now. First, it is going to be a long week end, our markets will reopen only on Tuesday, we need to react to two days of Global cues on Tuesday. Yesterday night US market closed higher but most Asian markets are lower as the Crude news is not factored in, in East Asian markets yesterday. Once again, FIIs and DIIs both have sold in Cash market. The same way Pakistan may not react immediately. This is the biggest issue in the last many years after Coal India issue. You are long or short, you should know how to manage your risk well. Tata Motors and Axis Bank both saw huge trading activity yesterday, unfortunately I have short position in both.

Now it is trading around 8910. DIIs however sold for Rs 213 crores. SGX Nifty is trading around 8950. Nifty future may trade between 8720 and 8820. Markets may stabilise after a panic start. One, Oil prices fell and that is actually good for India. Let us see how markets move today. Next day, Duetsch Bank news come and world markets are down. We need to see how much more it can fall.

Nifty RSI is around 70 and Bank Nifty RSI is above 70. Aircel merger, floating a new company Reliance Housing Finance, good results from Reliance Infra, etc. But Nifty is likely to expire between 8760 and 8840. North Korea nuclear news and US Fed rate hike news. It is difficult to predict the market movement today due to many reasons. Pharma may join them. Markets may trade within a range until Fed policy is clear next Wednesday. But we are trading very close to that level and panic is evident, so the level may be breached intraday, we need to see whether markets close below this level. Usually when markets fall in the last week of expiry, markets recover only in the next series.

Asian markets are mostly lower. Around the same time, Maruti will declare monthly sales data. Yesterday FIIs have turned net buyers in Cash market though their buying is very small. So today afternoon trade will be interesting. Yesterday FIIs have bought in Cash market in huge quantities. There are some reports that suggests US may go for rate hike taking advantage of higher stock market prices and low volatility world over. Since we are very close to the expiry, market movement will be difficult to predict. Once again, it is going to be Auto and Private Sector banks that will charge the bulls. Next week RBI policy may be one of the reasons for bullishness.

SGX Nifty is trading lower, around 8800. But eventually markets will breakout and test all time high. This rally will continue as this is not a broad based rally. If the figure is too low then also markets will fall as the economic growth is slowing down. Volatility may subside once markets stabilises after BoJ news. That is a negative as usually in this kind of panic, DIIs bused to buy. That may happen when BoJ and Fed do things that are far and against the expectation of the markets. Bank Nifty was highly volatile due to weekly expiry. IT and Pharma may not fall much but Banks may fall more.

But at the end of the day, FIIs were net buyers for Rs 660 croes which is a significant amount. On Monday, markets reacted in line with our expectation. Next is Reliance AGM at 11 am. China is flat and Hong Kong is higher, though it opened lower in the morning. Singapore has invested in ICICI Pru. Today it is opening above that figure is clearly a bullish sign. Nifty future is likely to face resistance at 8920. How market is going to take these figures is a billion dollar question. If that is crossed with some volume or if Nifty future trades above 8920 for more than 10 minutes, then the next target will be 8980. Bharti Airtel and Idea alone contrbuted 30 points for Nifty fall.

And that may happen now, markets may trade with huge volatility between 8700 and 9000. US markets closed mixed. Big correction may come only after making another upmove. Usually next month Bank Nifty future will trade at a premium of 100 points but now trading at 125 points premium. Asian markets are also mixed. SGX Nifty is trading around 8820. As the debate progresses, Asian markets started to recover. Third, 1000 DMA is positioned there. They will lose heavily as both Price and Volatility will go against them.

All Asian markets opened lower in the morning. Let us see what the figure is at 6 pm Indian time. Asian markets are mostly in Green. Most important of all, yesterday was the first day both FIIs and DIIs were net buyers in Cash market for more than 500 crores. In the last few days, DOW either moves higher by more than 100 points or lower by more than 100 points. Bank Nifty future hit a high of 19999. Yesterday FIIs have sold for Rs 1146 crores and DIIs have bought for Rs 777 crores. On Monday Asian markets followed. If the figure in too high, then markets will fall as the rate hike will happen sooner than expected.

That may be due to the weakness in Telecom stocks. Last time both FIIs and DIIs have bought like this in the first few months of 2015. All shares are expected to move slightly higher so the impact on Indices will be high. ITC and HDFC Bank dragged the index. On Friday, Bank Nifty was up by about 400 points in the morning and then fell almost 400 points in the afternoon. If not for these two stocks, Nifty would have ended in Green.

Earlier Yes Bank fell like this. Today it is all about BoJ. US markets closed higher after Dovish comment from Fed Chairman Janet Yellen and OPEC decision to freeze to Crude output. This one along with negative IIP data increases the case for rate cut by RBI in October 4 meeting. They will make huge losses today. Nifty future may cross 9000 towards the end of expiry. Nifty future broke 8700 but recovered in the last 15 minutes.

SGX Nifty is trading around 8750, about 30 points lower. DIIs have bought for Rs 496 crores. Fall in Crude oil prices and weak Manufacturing PMI and uncertainty about Jobs data to be released today evening all taking toll in US markets. As mentioned in my previous report after 9892 level nifty expected to face crucial resistance at 9960 level and that what we are seeing currently. On Sector analysis, nifty metal shining the most with approx. On long term time frame nifty breakdown from the channel pattern and closed below the support line. Last week US and North Korea war tension weighs on global market and a result of this nifty shown a remarkable correction of the year for the week. On the contrary, war on North Korea is still weighs on global market.

To get yours trading plans with entry and exit points for tomorrow and to make huge profit. For the coming week, Nifty may take the clues from the global market. Technically RSI is ranging below the 50 mark and nifty price is trading below the 20 day EMA of 9905 on daily chart may give enough room for the bear to act. On Monday trade Nifty closed at 9794. Whenever the event of rate hike by US central bank is there, we definitely see some good volatility and trading opportunity in the market to make huge money. Continue to face selling pressure on higher level nifty index correct down and made intraday low of 9752. For this week nifty hold crucial support level at 9640 below this it may further correct down to 9595 and 9540 level. Nifty open up gap at 9815.

On charts nifty forms a doji pattern reflecting indecisiveness of market direction in the coming week. Nifty Open up gap at 9864. As mentioned in my last report nifty above the level of 9775 may face the next resistance at 9810 level and that we saw on Monday trade. Nifty CMP 9932 trading with the profit of 34. In Nifty sector Analysis, Nifty CPSE is the top gainer at 2447. On Friday nifty shut shop at 9710. US central bank may give an opportunity to sell on rise for booking short term profit if fails to cross the resistance level and it vice versa it may add some more strength to the bull trend if holding above the support level.

Nifty trading range bound and a key level to watch is 9550. US Federal Reserve is most likely to increase the interest rate by 25 BPS today. US Fed Rate decision out today. Are you ready with your trading plans? On daily chart nifty forms a inverted hammer pattern and closed above the short term 5 Day EMA of 9792. Nifty shown pull back from the previous day low and now consolidating near 9800 level.

Nifty open up gap at 9945. If the futures price is less than the spot price during the delivery period, there is no similar perfect arbitrage method. What have you committed yourself to? What opportunities are open to an arbitrageur in the following situations? Normally, the shorter the maturity of a contract is, the higher the open interest. When you write a call option, the payoff is negative or zero. They therefore tend to reduce the futures price.

Show that, if the futures price of a commodity is greater than the spot price during the delivery period, then there is an arbitrage opportunity. What advice would you give? Spot and forward rates are quoted in this way for the British pound, euro, Australian dollar, and New Zealand dollar. The profit equals the terminal value of the call option less the amount paid for the put option. What is the difference between a long forward position and a short forward position? The trader does not have a choice.

Under what circumstances will the trade prove to be profitable? Once news of the quality problem became widely known no one would be prepared to buy the contract. It could be used to limit the losses from an existing long position. The options have the same maturity date. If one party is entering into a new contract while the other party is closing out an existing position, the open interest stays the same. Buying a put option involves buying an option from someone else. Discuss how forward and options contracts can be used by the company to hedge its exposure. When a market maker quotes a bid and an offer, the bid is the price at which the market maker is prepared to buy and the offer is the price at which the market maker is prepared to sell.

Speculators are important market participants because they add liquidity to the market. However, contracts must be useful for hedging as well as speculation. The profit is shown in Figure S1. The decision on when delivery will be made is made by the party with the short position. These are bonds in which the amount received by the holder at maturity varies with a foreign exchange rate. In return for the possible future losses, you receive the price of the option from the purchaser. The options have the same underlying asset, strike price and maturity. Suppose you call your broker and issue instructions to sell one July hogs contract.

The margin account administered by the broker is also marked to market daily. Confirmation of the trade eventually reaches you. When you buy a put option, the payoff is zero or positive. US company knows it will have to pay 3 million euros in three months. It is not in the public interest to allow speculators to trade on a futures exchange. The balance in the margin account is adjusted daily to reflect gains and losses on the futures contract. Describe the payoff from this method. The risk to the investor is that the stock price plunges to a low level. The arbitrageur should borrow money to buy a certain number of ounces of gold today and short forward contracts on the same number of ounces of gold for delivery in one year.

In futures markets, prices are quoted as the number of US dollars per unit of foreign currency. What do you think would happen if an exchange started trading a contract in which the quality of the underlying asset was incompletely specified? The most important aspects of the design of a new futures contract are the specification of the underlying asset, the size of the contract, the delivery arrangements, and the delivery months. This happens if the futures price of frozen orange juice falls by more than 10 cents to below 150 cents per pound. Speculation in futures markets is pure gambling. You have sold a put option. It closes out its position on January 21, 2013. Explain these two quotes.

If losses are above a certain level, the investor is required to deposit a further margin. It will then be sent by messenger to a commission broker who will execute the trade according to your instructions. What should the arbitrageur do? Explain carefully the difference between selling a call option and buying a put option. This is because regulators generally only approve contracts when they are likely to be of interest to hedgers as well as speculators. Many futures contracts have in practice failed because of the problem of defining quality. What is the total profit? This is known as a bull spread and will be discussed in Chapter 11. This is because the counterparty chooses whether to exercise. Parties with short positions would hold their contracts until delivery and then deliver the cheapest form of the asset. The party with a short position in a futures contract sometimes has options as to the precise asset that will be delivered, where delivery will take place, when delivery will take place, and so on. Assume that the company has a December 31 year end.

Thus if the forward price for delivery on January 1, 2012 increased between July 1, 2011 and September 1, 2011 the company will make a profit. The use of a call option provides, at a cost, insurance against the exchange rate being higher than the strike price. The forward market is therefore more attractive for an investor wanting to sell Swiss francs. Assume that the cost of storing gold is zero and that gold provides no income. Explain carefully the difference between hedging, speculation, and arbitrage. This is discussed in Chapter 11. Both options are on one million pounds and have a maturity of six months. The margin account administered by the clearing house is marked to market daily, and the clearing house member is required to bring the account back up to the prescribed level daily. Explain how margins protect investors against the possibility of default. Swiss francs per dollar.

This shows that futures contracts are feasible only when there are rigorous standards within an industry for defining the quality of the asset. The use of a forward contract locks in, at no cost, the exchange rate that will apply in three months. Under what circumstances will the option be exercised? This is because you choose whether to exercise. European call option and sells a European put option. What are the most important aspects of the design of a new futures contract? Do these options increase or decrease the futures price? If both sides of the transaction are closing out existing positions, the open interest decreases by one. Which is more favorable for an investor wanting to sell Swiss francs?

Selling a call option involves giving someone else the right to buy an asset from you. If the company is a hedger this is all taxed in 2013. Explain what the investor has agreed to. If both sides of the transaction are entering into a new contract, the open interest increases by one. It ensures that the foreign currency can be sold for at least the strike price. She is betting on the future movements in the price of the asset. In March, a US investor instructs a broker to sell one July put option contract on a stock.

What price change would lead to a margin call? The trader sells for 50 cents per pound something that is worth 48. Show that this ICON is a combination of a regular bond and two options. US company expects to have to pay 1 million Canadian dollars in six months. If the futures price is greater than the spot price during the delivery period, an arbitrageur buys the asset, shorts a futures contract, and makes delivery for an immediate profit. How much could you profit or lose? Live hog futures are traded on the Chicago Mercantile Exchange. If there are adverse movements in the futures price your broker may contact you to request additional margin. On September 1, 2011, it enters into a forward contract to sell 10 million Japanese yen on January 1, 2012. Does an arbitrage opportunity exist if the futures price is less than the spot price?

When might it be used? The trader does not have to exercise the option. This might well be viewed by the party with the long position as garbage! How high does the stock price have to rise for the option method to be more profitable? For other major currencies, spot and forward rates are quoted as the number of units of foreign currency per US dollar. US dollars per pound. On July 1, 2011, a company enters into a forward contract to buy 10 million Japanese yen on January 1, 2012.

However, the account does not have to be brought up to the initial margin level on a daily basis. These options make the contract less attractive to the party with the long position and more attractive to the party with the short position. This system makes it unlikely that the investor will default. Under what circumstances does the price of the call equal the price of the put? How could you use options to satisfy the treasurer? When a futures contract is traded on the floor of the exchange, it may be the case that the open interest increases by one, stays the same, or decreases by one.

An arbitrageur can take a long futures position but cannot force immediate delivery of the asset. It does not cost anything to enter into the forward contract. July futures contracts on frozen orange juice. The contract would not be a success. The investment in call options entails higher risks but can lead to higher returns. Scholes European as the option type. It acts as a guarantee that the investor can cover any losses on the futures contract. The trader sells for 50 cents per pound something that is worth 51. The profit as a function of the stock price is shown in Figure S1. It has to be brought up to the initial margin level when the balance in the account falls below the maintenance margin level.

This ignores the time value of money. However, traders tend to close out their positions in the month immediately before the maturity month. January 1, 2013, and March 2013. What differences exist in the way prices are quoted in the foreign exchange futures market, the foreign exchange spot market, and the foreign exchange forward market? The company could enter into a long forward contract to buy 1 million Canadian dollars in six months. Under what circumstances does the trader make a profit?

The Swiss franc is therefore more valuable in the forward market than in the futures market. The broker will request some initial margin. What type of option contract is appropriate for hedging? One example was its trade with the Long Term Credit Bank of Japan. Live cattle futures trade with June, August, October, December, February, and April maturities. This is known as a range forward contract and is discussed in Chapter 16. When the exchange rate is below 84. Apart from Reliance Industries, market was also supported by index pivotals like Axis Bank, Idea, Coal India and Asian Paints. Future and Options for February series.