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  • Best Stock Trading Platforms in India

    Best Stock Trading Platforms in India

    Motilal Oswal:

    Charges: 0.32/ per share    Account Min.: 00000

    Motilal Oswal Financial Services (MOFSL), is a well-diversified monetary companies firm centered on wealth creation via information. The company was based in 1987 as a small sub-broking unit with two promoters and a peon, Mr. Motilal Oswal & Ramdeo Agrawal.

    As we speak, they’re a multi-faceted monetary companies firm with a presence in over 600 cities via 2400+ business locations; ably managed by a crew of over 5000 employees. This community of enterprise places coupled with folks throughout enterprise models and a various vary of economic experience works synergistically to supply a number of services throughout Retail and Institutional Broking, Private Wealth Management, Investment Banking, Private Equity, Asset Management and Dwelling Finance.

    All these businesses are headquartered in a single location at Motilal Oswal Tower, Mumbai to provide sharing and synergy of information beneath one roof.

    The company began providing Derivatives merchandise and advisory services on both BSE in addition to NSE in 2001.In 2006 the company entered private equity and investment banking.

    In January 2010, Motilal Oswal Financial Services obtained the ultimate certificates of registration approval from Securities and Exchange Board of India (SEBI) to set up a mutual fund business within the nation.

    Motilal Oswal Group has been conferred with ‘Brand of The Year ’ on the CNBC TV18 Indian Business Leadership Awards 2018 and has been acknowledged amongst India’s top 100 greatest companies to work for – 2018 as per Great Place To Work® Institute – India & Economics Times survey.

    ZERODHA

    TRADING A/C OPENING CHARGES – Rs.300
    TRAING AMC – Rs.0
    DEMAT A/C  OPNING CHARGES- Rs.100
    DEMAT A/C AMC (YEARLY FEE)- Rs.300
    TRADES IN- BSE, NSE & MCX

    Zerodha Securities is likely one of the main low cost brokers and well-liked in India for buying and selling in Stock, Foreign currency  and Commodity Market With a Excessive quantity of Trader database. It additionally expenses brokerage of 0.01 paisa which is lowest broker.

    If we are going to discuss Optimistic affect of zerodha which is low publicity as a result of now days Many Broking Agency offering Excessive publicity which is dangerous for dealer specifically for Commodity Dealer, As a result of if you’ll commerce with excessive publicity within the commodity market then you will get enormous loss due to excessive publicity.

    Zerodha is much away from this downside and offering low publicity to dealer which can be a optimistic affect in brooking corporations.Zerodha Securities.

    Zerodha is a Branding Firm and hottest firm in India . We Recommend dealer to make use of Zerodha, it is Registered with SEBI also. Kindly trade and open account in Zerodha.

    Zerodha buying and selling platform is absolutely quick, advance and most technically featured.
    You can do alot of techincal evaluation & Research utilizing their charting instruments accessible on their platforms.
    They provide three model of buying and selling platforms:

    1- Pi( For Windows- Laptops/Desktop)
    2- Kite- Web Browser Based
    3- Kite Mobile App(Android and IOS)

    ICICI SECURITIES LTTD

    TRADING A/C OPNING CHARGES- Rs.975
    TRADING A/C AMC- 0
    DEMAT A/C OPENING CHARGES – O
    DEMAT A/C AMC (YEARLY FEE)- 600
    TRADING IN- BSE & NSE

    ICICI Securities Limited provides institutional and retail broking, service provider banking, and advisory services to corporates, monetary establishments, excessive net-worth people, and retail buyers in India. It operates via three segments: Funding & Buying and selling, Broking & Fee, and Advisory Providers.

    The corporate presents retail broking companies, which embody fairness, derivatives, forex, margin buying and selling funding and so forth.; and operates ICICIdirect.com, a web-based broking platform to put money into fairness, derivatives, forex futures, mutual funds, and different companies, similar to mounted deposits, loans, tax companies, gold bonds, alternate traded funds, new pension techniques, and life and common insurance coverage merchandise, in addition to entry to analysis data, inventory picks, and mutual fund suggestions.

    It additionally supplies personal wealth management companies, similar to investment banking, fairness analysis and advisory, and execution companies, in addition to fairness linked and structured products, personal fairness, portfolio management, various funding funds, and so forth.; and operates roughly 200 ICICIdirect branches in 75 cities.

    As well as, the corporate presents fairness capital market products, together with initial public offerings (IPOs), rights points, share buyback, delisting, open presents, and fairness personal placements; advisory companies for acquisitions, divestitures, joint ventures, company restructurings, recapitalizations, spin-offs, mergers, and alternate presents; and personal fairness advisory companies on varied merchandise, together with mezzanine and personal fairness financing, secondary sale transactions, pre-IPO offers, and preferential allotments by listed corporations. ICICI Securities Restricted was previously generally known as ICICI Securities and Finance Firm Restricted and adjusted its identify to ICICI Securities Restricted in April 2003. The corporate was integrated in 1995 and is headquartered in Mumbai, India. ICICI Securities Limited is a subsidiary of ICICI Bank Limited.

    In 2017, the corporate launched investment in AIFs on a private placement foundation on ICICIdirect platform, margin buying and selling facility, funding of worker inventory possibility schemes, issue primarily based portfolios (developed by MSCI), abroad buying and selling facility (via a strategic partnership with a web-based multi-asset buying and selling and funding platform) and multi worth order’ within the fairness section.

    Throughout the year below evaluation, stay’ notifications had been launched on the ICICIdirect cell software. Through the yr below evaluation, the corporate launched One Click on Funding’ for funding in mutual funds on ICICIdirect platform.

    On 18/12/2017 the corporate filed Draft Red Herring Prospectus and on 19/03/2018 filed Red Herring Prospectus with SEBI for elevating Rs. 3514.85 cr. The Challenge dates had been from 22/03/2018 to 26/03/2018 with Worth Band of Rs. 519 to Rs. 520. The Challenge received subscribed 0.99 times leading to its Challenge Worth being mounted at Rs. 520. The Shares received listed in BSE and NSE on 04/04/2018 at Rs. 431.10 which is 17.10% under Challenge Worth.

    HDFC SECURITIES LTD

    TRADING A/C OPNING CHARGES- Rs.999
    TRADING A/C AMC (YEARLY FEE) – Rs.0
    DEMAT A/C OPNING CHARGES- 0
    DEMAT A/C AMC (YEALY FEE)- 600
    TRADING IN – BSE & NSE

    HDFC securities Ltd, integrated in 2000 and a 100% subsidiary of HDFC Bank Ltd is a stock broking firm. Headquartered in Mumbai, it started the journey by establishing an impeccable buyer base to commerce in Equities, IPO’s, Mutual Funds, ETFs, Futures & Options, Foreign currency Derivatives, Nationwide Pension System, NRI Offerings, Insurance, Fixed Deposits, Bonds, NCDs and Buy backs with extra worth added companies.

    The company presents a number of buying and selling platforms to the shoppers like Call ‘N’​ Trade, Mobile App, mPowered or go to the closest branch. Since its inception, the company has established itself as a ‘Preferred’- trading platform (both the NSE & BSE) for customers with its distinctive built-in account (Buying and selling + Demat + Savings) backed by the state-of-the-art expertise.

    Through the years, the corporate has gained many awards and recognition. It has been concerned in varied CSR actions pertaining to training, water, sanitation, financial awareness and medical help for needy & poor individuals who can’t afford to undergo surgery or purchase medicines. Presently, the company has 273+ branches in 190 cities of the nation serving 1.eight million clients. The huge consumer base contains roughly 10% of the entire clients buying and selling on the exchanges. HDFC securities is well-known with skilled merchants for its complete on-line buying and selling portal choices.

    SHAREKHAN

    TRADING A/C OPNING CHARGES – Rs.0
    TRADING AMC (YEARLY FEE) – 0
    DEMATE A/C OPENING CHARGES -0
    DEMATE A/C AMC (YEARLY FEE)- Rs.400(free for 1st yr)
    TRADING IN- BSE, NSE, MCX & NCDEX

    Sharekhan Limited offers on-line safety broking and portfolio services to institutions and huge company homes in addition to particular person buyers. Sharekhan Limited was previously generally known as SSKI Investor Services Private Limited. This trading platform is based in Mumbai, India. As of November 23, 2016, Sharekhan Limited operates as a subsidiary of BNP Paribas SA.

    Sharekhan was one of many first brokers to supply online buying and selling in India. With 16 lakh clients, 153 branches and greater than 2400 enterprise companions unfold throughout over 575 places, Sharekhan is likely one of the largest brokers in India. Sharekhan offers a variety of savings & investment options together with equities, futures and options. forex buying and selling, portfolio administration, analysis and mutual funds and investor education. On an average, Sharekhan executes greater than 400,000 trades each day

  • TECHNICAL ANALYSIS

    TECHNICAL ANALYSIS

    Technical analysis is the forecasting of future financial price movement based on an examination of past price movements. Like weather forecasting, technical analysis does not result in absolute prediction about the future. Instead, technical analysis can help investors anticipate what is “likely” to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time.

    Long-Term-View

     

    Short-Term-View

    Technical analysis is a study of a particular script by historic Rate, volume & quantity. By studying technical analysis we can predict the price movement in market & a particular share. By studying charts we can easily understand the price movement happened in history & we can understand the trend in market. Share price movement at what price the share will move when will it move and when will it fall can be studies through chart analysis. Therefore, chart is the foundation of this market & it will always be there.

              TREND:

    1. While trading in stock market understanding trend through technical analysis is important.
    2. Trend is a way or a direction which helps in change of rate of shares.
    3. There are 3 important parts of trend
    4. UP trend
    5. DOWN trend
    6. SIDEWAYS trend

    a.  UP TREND:

    • If a particular share is on the verge to go up then it is known as up trend.
    • There is huge volume build up in starting. So everyone starts buying so many times scripts intends to have upper circuit.

    In this trend, script moves higher high means its beats last high price & higher low means it breaks the low of last low.

    b.  DOWN TREND:

    • If the price of the a particular script goes down day by day then its called as down trend.
    • There is huge selling volume in done trend.
    • Lot of traders do short selling in this trend so there are chances of lower circuit.
    • In this trend scripts starts making lower rate of high & lower low means last low rate less low.

    c.   SIDE WAYS TREND:

    • Investors get bored in this trend.
    • The stock way is not clear in this trend.
    • Volume during sideways market is very less.
    • Intraday traders get very less chance to participate there are more possibilities of Stoploss to hit.

    VOLUME:

    • Volume means in a particular time how much buy-sell happened which produced turnover.
    • Volume means number of traded quantity of shares in specified time.
    • In share market more volume means the stock is more active & liquid.
    • Understanding volume is very important in technical analysis.
    • By seeing volume we can easily understand the market trend in advance.
    • To see whether the volume is up or down you can see those details at the downside of the chart which is started as volume bars.
    • Volume gives signal before the rate, this is the reason that volume plays a very important role in technical analysis.
    • In uptrend is the volume starts drying then the understanding become that it is end of uptrend.
    • In downtrend is the volume starts drying then the understanding becomes that it is end of downtrend.

    SUPPORT:

    • Support means, at what rate we can place an idea that the rate will not go down below this rate & there will be an upside from this rate, this particular part is known as support.
    • You can draw a support line by joining support point join.
    • In support line if we get maximum support points the line becomes stronger.
    • At support point huge quantity of shares buying happens & rate starts increasing.
    • But if rate falls below support line then the price starts decreasing & then a new support is formed.
    • That’s why its suggested that if support is breached then we have to short sell & if rate is above support line then we have to place stop loss.

    RESISTANCE:

    • Resistance means its that rate where we feel that price will not move above this point & it will fall further this point is known as resistance.
    • We can join any 2 Resistance Points & draw Resistance line.
    • In resistance line more resistance points means the resistance line becomes stronger.
    • Huge selling comes is the rate of stock falls below the resistance point & price starts decreasing.
    • But is in situation the rate breaks resistance point & goes up, then the rate starts increasing & new resistance point happens.
    • Therefore, if resistance line if breached you have to buy & if you have to keep a stop loss below resistance line.

     

    INDICATOR:

    1.MOVING AVERAGES:

    • Moving average is the value derived from the particular closing rate for that particular time frame.
    • Example if we are discussing on the moving average of 10 days then price is the average of this 10 days.
    • Thus, we derive the average price & join points & prepare average lines.
    • Now let’s draw moving average lines practically.

    a.   SHORT TERM TREND:

    • To understand Short term trend we need to understand 10 to 20 days moving average.
    • Therefore, is you need to take position for 1-2 days then we need to check moving averages of 10-20 days.
    • If price is above moving average of 10 days then it’s a buy & if it is below then it we have to place stop loss.
    • Lets see example on chart.

    b.  MIDDLE TERM TREND:

    • To check middle term trend we study 50 days moving average.
    • So if you need to buy a particular shares for 5-6 months then we use 50 days moving average.
    • If price is above moving average of 50 days then it’s a buy & if it is below then it we have to place stop loss.
    • Similarly if the price is below 50 days moving average then we need to short sell & above the moving average should be our stop loss.

    c.   LONG TERM TREND:

    • To check long term trend we study 100 days moving average.
    • If we need to invest for one year or more than that then we need to study 100 days moving average.
    • If the rate is above 100 days moving average then we can buy & below 100 days moving average then we need to put stop loss order or we can create a short sell position.

    MACD:

    • MACD is an acronym for Moving Average Convergence Divergence.
    • MACD is created by Gerald Apple in the late 1970’s.
    • This tool is used to identify moving averages that are indicating a new trend, whether its bullish or bearish.
    • With an MACD chart, you will usually see three numbers that are used for its setting.
    • The first is the number of periods that is used to calculate the faster moving average.
    • The second is the number of periods that is used in the slower moving average.
    • And the third is the number of bars that is used to calculate the moving average of the difference between the faster & slower moving average.
    • Red line is slow moving average & Blue line is fast moving average.
    • Blue is a MACD line & Red is a SIGNAL line; vertical line is MACD HISTOGRAM.
    • Divergence occurs when the moving averages move away from each other. This is called divergence because the faster moving average is “diverging” or moving away from the slower moving average.
    • Convergence occurs when the moving averages move towards each other. This is called convergence because the faster moving average is “converging” or getting closer to the slower moving average.
    • CALCULATION:
    • MACD = (12day EMA – 26day EMA)
    • SIGNAL = 9 days EMA of MACD line
    • HISTOGRAM = MACD line – SIGNAL line
    • If blue line & red line cross each other above the zero line it’s generate selling call & if blue line or red line cross each other below the zero line that mean’s this indicator show buying call.

     

    RSI:

    • Relative Strength Index, or RAI is a popular indicator developed by a technical analyst named Welles Wilder.
    • RSI is similar to the Stochastic in that it identifies overbought & oversold conditions in the market.
    • It is also scaled from 0 to 100.
    • Typically, reading below 30 indicate oversold market conditions.
    • Readings over 70 indicate overbought conditions.
    • In RSI, line below 50 indicate down trend & line over 50 indicate up trend.
    • If RSI line moves downword after crossing or touching 70 then it indicates profit booking time.

    TYPES OF CHARTS:

    a.  LINE CHART:

    • Line chart is a simple methodology of technical analysis.
    • Depending upon time & price line is drawn on the chart.
    • Line chart will only tell us at what the rate was & we could not see open, close high & low of a particular share.

    b.  BAR CHARTS:

    • Bar chart is very famous in Technical Analysis.
    • We get more detailed information in Bar Chart then line chart.
    • We understand time frame, open, close, high & low in bar charts.
    • Horizontal line on left indicates open & horizontal line on the right indicates close.
    • Upper point of the straight line indicates high & lower point of the straight line indicates low.

     

    c.   CANDLESTICK CHART:

    • Candlestick chart plays an very important role in technical analysis. Maximum countries in the world use candlestick chart for studying technical analysis.
    • The invention of this chart was done in JAPAN therefore it is also known as JAPANESE CANDLESTICK CHARTS.
    • This chart is denoted by various colors.
    • The day when the close rate of a particular script is low then the open rate then it is displayed by red color.
    • The day when the close rate of a particular script is high then the open rate then it is displayed by green color.
    • In candle stick chart above stick shows high & below stick shows us low.

     

    • Now we will take a small test on how candle stick is formed.
    • We will share a data with you & you have to draw a candle & show whether it is bullish or bearish.
    • Lets note the procedure to draw the candle first.

    Step 1 -> Check open rate first & draw a horizontal line.

    Step 2 -> Now see the close rate & if close is above then draw horizontal line above the open line & if close is less then open then draw horizontal line below open line.

    Step 3 -> Get the candle body ready.

    Step 4 -> Is candle bullish (Green) or bearish (Red) write it down.

    Step 5 -> If it has shown high then draw stick of high & if it has shown low then draw stick of low.

     

    • This way we can understand how the candle is down which is useful to study chart.

     

     

     

  • Option Market

    Option Market

    DEFINITON:

    “A stock option is a contract between two parties in which the stock option buyer (Holder) purchase the right (but not the obligation) to buy/sell 100 shares of an understanding stock at a predetermind price from /to the option seller (writer) within a fixed period of time.”

    Nowdays, many investors portfolios include investments such as mutual funds, stocks & bonds. But the variety of securities you have at your disposal does not end there. Another type of security, known as option.

    Option based on equities, more commonly known as ‘stock option’. Stock options are listed on exchange like  the NYSE in the form of a quote. It is important to understand the details of a stock option quote before you make a move like the cost & expiration date.

    Options are types of Derivatives security. They are derivative because the price of an option is instrinsically limited to the price of something else. Options are contracts that grant the right, but not the obligation to buy or sell an underlying asset at a set price on or before a certain date. The right to buy is called CALL OPTION & the right to sell is a PUT OPTION.

    Option traders are self- directed investors, meaning they don’t work directly with a financial advisor to help manage their option trading portfolio. As a Do It Yourself (DIY) investor, you are in full control of your trading decisions & transactions. But that doesn’t mean you are alone.

    There are plenty of communities that bring traders together to discuss things like current market outlook & option trading strategies.

    ADVANTAGES OF OPTION TRADING

    1. LEVERAGE

    The main advantages of trading stock options than simple stock is the leverage involved. Options allow you to employ considerable leverage. Option enable you to control the shares of a specific stock without trying a large amount of capital in your trading account. The amount of capital (premium) that you are paying is a relatively small amount comparing to the cost of buying the same amount of stocks.

    The capability to invest a smaller amount of capital & control the stock give the option trader the flexibility to:

    • Trade higher priced stocks, the big moves, that are normally out of reach to the smaller account trader.
    • Magnify profit when the stock moves in your favor.
    • Make money based on a relatively small movement in the stock.

    This is an advantage to disciplined traders who know how to use leverage.

    2. PROFIT FROM BULL, BEAR & SIDE WAY MARKET

    There are various options strategies that give the options trader the ability to make money from all market directions (up, down or side way market) with limited risk exposure & potentially unlimited profit.

    A few examples are, buying call options when the market is bullish, buying put options when the market is bearish & entering into various credit spread strategies to earn profit when the market is range bound.

    3. HEDGING AGAINST RISK

    Stocks options can be used as an instrument to hedge against various risk exposure of stock holder. For example, If you are a holder of 1000 shares of IBM & suspect that the stock price might drop, instead of selling the shares to stay away from the uncertain future, you can simply buy 10 put options to protect your current position. It can be an inexpensive insurance to protect your stock portfolio from any adverse move in the market.

    Disadvantages of Option

    Trading

    1. Taxes. Except in very rare circumstances, all gains are taxed as short-term capital gains.  This is essentially the same as ordinary income.  The rates are as high as your individual personal income tax rates. Because of this tax situation, we encourage subscribers to carry out option strategies in an IRA or other tax-deferred account, but this is not possible for everyone.  (Maybe you have some capital loss carry-forwards that you can use to offset the short-term capital gains made in your option trading).
    2. Commissions. Compared to stock investing, commission rates for options, particularly for the Weekly options, are horrendously high.  It is not uncommon for commissions for a year to exceed 30% of the amount you have invested.   Be wary of any newsletter that does not include commissions in their results – they are misleading you big time.
    3. Wide Fluctuations in Portfolio Value.  Options are leveraged instruments.  Portfolio values typically experience wide swings in value in both directions.

    The most popular portfolio at Terry’s Tips (they call it the Weekly Mesa) gained over 100% (after commissions) in the last 4 months of 2010.  The underlying stock for the Weekly Mesa is the S&P 500 tracking stock, SPY, one of the most stable of all indexes.  Yet their weekly results included a loss of 31.3% in the last week of November (they have added an insurance tactic to make that kind of loss highly unlikely in the future, by the way).  Three times, their weekly gains were above 20%.

    Many people do not have the stomach for such volatility, just as some people are more concerned with the commissions they pay than they are with the bottom line results (both groups of people probably should not be trading options).

    Option market are modified advance version of future contracts. In this lot size, margin & expiry are same as future. In option contract strike price is the is the price which we need to select while buying & selling. Premium – in option contract premium is the actual rate which we need to pay while buying or selling of option. Different strike price has different premium. Option market is difficult to understand in starting but as we trade practically lot of things get clear.

    THERE ARE TWO MAIN CLASSES OF OPTION MARKET:

     1. CALL OPTION

     DEFINITION:

     “Call options are an agreement that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity or other instrument at a specified price within a specific time period. The stock, bond or commodity is called the underlying asset.”

    When we think that original price of a particular stock is going to go up & we are bulling on the particular stock then we buy Call Option.

    Eg: SBIN EQ price = 250 and * is its premium.

    If we buy 250 strike price option at X rate then will be its premium. And as and when the original price of the stock goes up the premium rate also goes up & we come in profit.

    But if we have bought call option & original price of the stock comes down then the premium also comes down & we are in loss. Call option buyers is known as Option Holder & call option seller is known as Option Writer.

    Eg: In rent agreement or sale deed buyer is known as option buyer & seller is known as option seller.

    Call option buyer is Bullish or Positive on the market & call option writer is Bearish or Negative on the market.

    Buyer & seller have to decide strike price. Buyer pays premium to seller & premium is non-refundable. Call option buyer buys premium from seller at the strike price which he has selected & he can ask delivery of shares from the seller. Taking delivery is purely depended on buyer, it is not compulsion. If call option buyer ask delivery to call option seller then it is compulsion to give shares to call option buyer.

    Now let’s look at a example of call option buyer & call option seller.

    SBI Equity cmp (current market price) = 250

    Buy SBI 260 call   Exp 24nov2016 @5 (Buyer A)

    Sell SBI 260 Call   Exp 24Nov2016 @5 (Seller B)

    In above example Buyer A & seller B have a trade of call option, 260 is the strike price & Rs.5 is its premium.

    BUYER A:

    Buyer A feels that before expiry rate of SBI will go above Rs.260 in which he intends to earn profit & he pays a premium of Rs.5. And if till expiry if SBI rate is 3000 then following is the profit to buyer.

    Buyers got a profit of Rs.35 & the lot size of SBI is 3000 so 1,05,000/-

    Total profit = 35 * 3000 = 105000 Rupees

    And at expiry if SBI is below 260 then he will have a loss of Rs.5

    Total loss = 5 * 3000 = 15000

    Total loss of Rs.15000/- will happen.

    SELLER B:

    If seller B thinks that SBI will be below 260 & he should be in profit he will buy the premium paid buys the buyer of Rs.5. So seller B is in profit as follows.

    Therefore call option buyer as limited loss & unlimited profit & option seller has limited profit & unlimited loss.

    MEANS CALL OPTION BUYER OF LOSS LIMITED & PROFIT UNLIMITED THEREFOF OPTION SELLER OF PROFIT LIMITED & LOSS UNLIMITED CAN BE DONE.

    Value of an option (premium)

    Premium = Intrinsic value + time value/ (Intrinsic price)

    For call option intrinsic value = equity price – strike price

    For example 250 this equity price is & we 240 that strike price takes then

    Call option intrinsic value = 250 – 240 = 10

    Put option intrinsic value = strike price – equity price

    Strike Price For Call Option:

    Time value:

    More the expiry more time value is there & as expiry comes to near time value decreases. At expiry time value become 00.

    Premium Depends Upon:

    1. Underlying value (means equity price)
    2. Strike price
    3. Time for expiry
    4. Volatility (possibility)
    • Higher the price, Higher the premium.
    • Higher the strike price, Lower the premium.
    • Greater the time for expiry, Higher the premium.
    • Higher the volatility, Higher the premium.

    TIPS:

    • Premium is already defined; we don’t need to calculate the same. So please don’t sit & calculate the premium.
    • All option contracts are executed automatically on expiry.
    • Option buyer has to pay premium so his maximum loss is his premium. Similarly option sell has to pay 10-20% margin so his loss is his margin paid to broker.
    Call option buyer (Holder) Call option seller (writer)
    Bullish   Bearish
    Pay premium    Receives premium
    Max profit unlimited Max profit is premium received
    Max loss is premium paid Max loss is unlimited
    Margin not required Margin required for sell call option

     

    1. PUT OPTION

    Definition:

    “A put option is an option contract giving the owner the right, but not the obligation to sell a specified amount of an underlying security at a specified price within a specified time frame. This is the opposite of a call option, which gives the holder the right to buy an underlying security at specified price, before the option expires.”

    All things of PUT options are all opposite of call option. when we think that the price of a particular share is going to go down then we buy PUT.

    For Eg SBIN Eq (Equity) price= 250 &* is the premium for it

    As and when the price of share starts declining more & more we start making profit. And as and when the price of the share starts increasing more & more we start making losses.

    Put option buyer gets benefits when market falls & put option seller gets benefits when market goes up.

    For Example – L&T EQ. price 1500 (CMP)

    And consider that price of L&T comes to 1300 at expiry then

    Value

     

    • Put option buyer has has limited risk= premium paid &

    Unlimited profit

    • Potential as price decreases, Put Option Seller has limited profit i.e.
    • Premium received & bears unlimited losses if price decreases, so 10 to 20% margin required to sell put option.
    • Option premium for in the money is more & option premium for out of the money is less.
    Put option buyer (Holder). Put option seller (Writer).
    Bearish. Bullish.
    Pays premium. Received Premium.
    Max profit unlimited. Max profit is premium received.
    Max loss is premium paid. Max loss unlimited.
    Margin not required to buy (only premium). Margin required to short put option (premium not required).

     

  • Know about Mutual Fund

    Know about Mutual Fund

    DEFINITION:

    “A mutual fund is a professionally managed investment scheme, usually run by an asset management company that brings together a group of people & invests their money in stocks, bonds & other securities.”

     

    INTRODUCTION:

    Mutual funds are the most popular investment types for the everyday investor. Because they are easy to use in many in many ways, investing for dummies. A mutual fund is a kind of investment that uses money from many investors to invest in stocks, bonds & other types of investment. A fund manager decides how to invest the money & for this he is paid a fee, which comes from the money in the fund. All the MUTUAL FUNDS are registered with SEBI.

    In simpler terms, mutual funds are like baskets. Each basket holds certain types of stocks, bonds or a bland of stocks & bonds to combine for one mutual fund portfolio.

    Eg:   An investor who buys a fund called XYZ international stock is buying one investment security, the basket that holds dozens or hundreds of stocks from all around the globe, hence the “International” monike.

    Mutual fund

    TIP’S FOR BEGINNERS INVESTING IN MUTUAL FUNDS

    • Start saving & investing early in life.
    • Try to understand the fund in which you are investing.
    • Check the past performance of your mutual fund.
    • Don’t avoid Index fund.
    • Experience of fund managing team
    • Do not commit common mistakes
    • Understanding the risk involved
    • Keep your investment objective clear.
    • The NAV does not matter.
    • Diversify your investment over time.
    • Have an investment discipline.
    • Invest in stocks if you are prepared to take risks.
    • Never forgot your mutual fund investment.
    • Stay invested for a longer period of time.

     

    NAV ( NET ASSET VALUE )

    NET ASSET VALUE is the total asset value (net of expenses) per unit of the fund & is calculated by AMC (asset management company) at the end of every business day. In order to calculated the NAV of a mutual fund, you need to take current market value of the funds assets minus the liabilities, if any & divide it by the number of share outstanding. NAV is calculated as follows.

    NAV Rs. = MARKET/FAIR VALUE OF SECURITIES + ACCRUED          INCOME + RECEIVABLE + OTHER ASSETS + ACCRUED   EXPENSES – PAYABLES – OTHER LIABILITIES

    / NO.OF UNITS OUTSTANDING OF THE SCHEME/OPTION

    Eg. If the market value of securities of mutual fund scheme is Rs. 500 lakh & the mutual fund has issued 10lakh units of Rs. 10lakh each to investors, then the NAV unit of the fund is Rs.50.

     

    ADVANTAGES OF MUTUAL FUND

    DIVERSIFICATION

    Mutual funds provide the benefits of diversification across different sectors & companies. A single mutual fund can hold securities from hundreds or even thousands of issuers. This by investing in a mutual fund, you can gain from the benefits of diversification & asset allocation, without investing a large amount of money that would required to build an individuals portfolio. The diversification considerably reduces the risk of serious monetary loss due to problems in a particular company or industry.

    AFFORDABILITY

    You can begin buying units or shares with a relatively small amount of money.

    Eg. Rs. 500 for the initial purchase.

    Some mutual funds also permits you to buy more units on a regular basis with even smaller installments.

    Eg. Rs.50 per month.

     

    LOW TRANSACTION COST

    Due to economics of scale, mutual funds pay lower transaction costs. The benefits are passed on to mutual fund investors which may not be enjoyed by an individual who enters the market directly.

    TRANSPARENCY

    Funds provide investors with updated information pertaining to the markets & schemes through fact sheets, offer documents, annual report etc.

     

     

    DISADVANTAGES OF MUTUAL FUNDS

    ·      High Expense Ratios and Sales Charges

    If you’re not paying attention to mutual fund expense ratios and sales charges, they can get out of hand. Be very cautious when investing in funds with expense ratios higher than 1.20%, as they will be considered on the higher cost end. Be weary of 12b-1 advertising fees and sales charges in general. There are several good fund companies out there that have no sales charges. Fees reduce overall investment returns.

    ·      Management Abuses

    Churning, turnover and window dressing may happen if your manager is abusing his or her authority. This includes unnecessary trading, excessive replacement and selling the losers prior to quarter-end to fix the books.

    ·      Tax Inefficiency

    Like it or not, investors do not have a choice when it comes to capital gain payouts in mutual funds. Due to the turnover, redemptions, gains and losses in security holdings throughout the year, investors typically receive distributions from the fund that are an uncontrollable tax event.

    ·      Poor Trade Execution

    If you place your mutual fund trade any time before the cut-off time for same-day NAV, you’ll receive the same closing price NAV for your buy or sell on the mutual fund. For investors looking for faster execution times, maybe because of short investment horizons, day trading, or timing the market, mutual funds provide a weak execution strategy.

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