INTRODUCTION

1.1 A STUDY ON DERIVATIVES:

The only stock exchanges operating in the 19 the century were those of Bombay set up in
1875 and Ahmedabad set up in 1894. These were organized as voluntary non-profit-making
association of brokers to regulate and protect their interests. Before the control on securities
trading became a central subject under the constitution in 1950, it was a state subject and the
Bombay securities contracts (control) Act of 1925 used to regulate trading in securities. Under
this Act, The Bombay stock exchange was recognized in 1927 and Ahmedabad in 1937.
During the war boom, a number of stock exchanges were organized even in Bombay,
Ahmedabad and other centers, but they were not recognized. Soon after it became a central
subject, central legislation was proposed and a committee headed by A.D.Gorwala went into the
bill for securities regulation. On the basis of the committee's recommendations and public
discussion, the securities contracts (regulation) Act became law in 1956.

1.1.1 OBJECTIVES OF STUDY:

1. To study various trends in derivative market.
2. Comparison of the profits/losses in cash market and derivative market.
3. To find out profit/losses position of the option writer and option holder.
4. To study in detail the role of the future and options.
5. To study the role of derivatives in Indian financial market.
6. To study various trends in derivative market.
7. Comparison of the profits/losses in cash market and derivative market.
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8. To find out profit/losses position of the option writer and option holder.
9. To study in detail the role of the future and options.
10. To study the role of derivatives in Indian financial market.

1.1.2 NEED OF THE STUDY

Different investment avenues are available investors. Stock market also offers good
investment opportunities to the investor alike all investments, they also carry certain risks.
The investor should compare the risk and expected yields after adjustment off tax on various
instruments while talking investment decision the investor may seek advice from expartry
and consultancy include stock brokers and analysts while making investment decisions. The
objective here is to make the investor aware of the functioning of the derivatives.
Derivatives act as a risk hedging tool for the investors. The objective if to help the investor in
selecting the appropriate derivates instrument to the attain maximum risk and to construct the
portfolio in such a manner to meet the investor should decide how best to reach the goals
from the securities available.
To identity investor objective constraints and performance, which help formulate the
investment policy?
The develop and improvement strategies in the with investment policy formulated. They will
help the selection of asset classes and securities in each class depending up on their risk
return attributes.

1.1.3 SCOPE OF THE STUDY

The study is limited to Derivatives with special reference to futures and options in the
Indian context; the study is not based on the international perspective of derivative markets.

The study is limited to the analysis made for types of instruments of derivates each
strategy is analyzed according to its risk and return characteristics and derivatives performance
against the profit and policies of the company.

1.1.4 LIMITATION OF THE STUDY

The subject of derivates if vast it requires extensive study and research to understand the
dept of the various instrument operating in the market only a recent plenomore. But various
international examples have also been added to make the study more comfortable.
There are various other factors also which define the risk and return preferences of an
investor how ever the study was only contained towards the risk maximization and profit
maximization objective of the investor.
The derivative market is a dynamic one premiums, contract rates strike price fluctuate on
demand and supply basis. Therefore data related to last few trading months was only consider
and interpreted.

1.2 DEFINITION OF STOCK EXCHANGE:

"Stock exchange means any body or individuals whether incorporated or not, constituted
for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in
securities."
It is an association of member brokers for the purpose of self-regulation and protecting
the interests of its members. It can operate only if it is recognized by the Government under the
securities contracts (regulation) Act, 1956. The recognition is granted under section 3 of the Act
by the central government, Ministry of Finance.

BYLAWS:
Besides the above act, the securities contracts (regulation) rules were also made in 1957
to regulate certain matters of trading on the stock exchanges. There are also bylaws of the
exchanges, which are concerned with the following subjects.
Opening/closing of the stock exchanges, timing of trading, regulation of blank transfers,
regulation of badla or carryover business, control of the settlement and other activities of the
stock exchange, fixation of margins, fixation of market prices or making up prices, regulation of
taravani business (jobbing), etc., regulation of brokers trading, brokerage charges, trading rules
on the exchange, arbitration and settlement of disputes, settlement and clearing of the trading etc.

1.2.1 REGULATION OF STOCK EXCHANGES:

The securities contracts (regulation) act is the basis for operations of the stock exchanges
in India. No exchange can operate legally without the government permission or recognition.
Stock exchanges are given monopoly in certain areas under section 19 of the above Act to ensure
that the control and regulation are facilitated. Recognition can be granted to a stock exchange
provided certain conditions are satisfied and the necessary information is supplied to the
government. Recognition can also be withdrawn, if necessary. Where there are no stock
exchanges, the government can license some of the brokers to perform the functions of a stock
exchange in its absence.

1.2.2 SECURITIES AND EXCHANGE BOARD OF INDIA(SEBI):

SEBI was set up as an autonomous regulatory authority by the Government of India in
1988 " to protect the interests of investors in securities and to promote the development of, and
to regulate the securities market and for matters connected therewith or incidental thereto." It is
empowered by two acts namely the SEBI Act, 1992 and the securities contract(regulation)Act,
1956 to perform the function of protecting investor's rights and regulating the capital markets.

1.2.3 BOMBAY STOCK EXCHANGE

This stock exchange, Mumbai, popularly known as "BSE" was established in 1875 as " The
Native share and stock brokers association", as a voluntary non-profit making association. It has
an evolved over the years into its present status as the premiere stock exchange in the country. It
may be noted that the stock exchanges the oldest one in Asia, even older than the Tokyo Stock
exchange which was founded in 1878.
The exchange, while providing an efficient and transparent market for trading in
securities, upholds the interests of the investors and ensures redressed of their grievances,
whether against the companies or its own member brokers. It also strives to educate and
enlighten the investors by making available necessary informative inputs and conducting
investor education programmes.
A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public
representatives and an executive director is the apex body, which decides the policies and
regulates the affairs of the exchange. The Executive director as the chief executive officer is
responsible for the day today administration of the exchange. The average daily turnover of the
exchange during the year 2000-01(April-March) was Rs 3984.19 crs and average number of
daily trades 5.69 laces.

However the average daily turnover of the exchange during the

year 2001-02 has declined to Rs. 1244.10 crs and number of average daily trades during the
period to 5.17 laces.The average daily turn over of the exchange during the year 2002-03 has
declined and number of average daily trades during the period is also decreased.
The Ban on all deferral products like BLESS AND ALBM in the Indian capital markets by
SEBI i.e. July 2, 2001, abolition of account Period settlements, introduction of compulsory
rolling settlements in all scrips traded on the exchanges i.e. Dec 31,2001, etc., have adversely
impacted the liquidity and consequently there is a considerable decline in the daily turn over at
the exchange. The average daily turn over of the exchange present scenario is 110363 (Laces)
and number of average daily trades 1057(Laces)

BSE INDICES:
In order to enable the market participants, analysts etc., to track the various ups
and downs in the Indian stock market, the Exchange has introduced in 1986 an equity stock
index called BSE-SENSEX that subsequently became the barometer of the moments of the share
prices in the Indian stock market.

It is a "Market capitalization-weighted" index of 30

component stocks representing a sample of large, well-established and leading companies. The
base year of Sensex is 1978-79.

The Sensex is widely reported in both domestic and

international markets through print as well as electronic media.

Sensex is calculated using a market capitalization weighted method.

As per this

methodology, the level of the index reflects the total market value of all 30-component stocks
from different industries related to particular base period. The total market value of a company
is determined by multiplying the price of its stock by the number of shares outstanding.
Statisticians call an index of a set of combined variables (such as price and number of shares) a
composite Index. An Indexed number is used to represent the results of this calculation in order
to make the value easier to work with and track over a time. It is much easier to graph a chart
based on Indexed values than one based on actual values world over majority of the well-known
Indices are constructed using Market capitalization weighted method ".
In practice, the daily calculation of SENSEX is done by dividing the aggregate market
value of the 30 companies in the Index by a number called the Index Divisor. The Divisor is the
only link to the original base period value of the SENSEX. The Divisor keeps the Index
comparable over a period of time and if the reference point for the entire Index maintenance
adjustments. SENSEX is widely used to describe the mood in the Indian Stock markets. Base
year average is changed as per the formula
New base year average = Old base year average*(New market Value/old market value)

1.2.4 NATIONAL STOCK EXCHANGE

The NSE was incorporated in Nov 1992 with an equity capital of Rs. 25 crs. The
International securities consultancy (ISC) of Hong Kong has helped in setting up NSE. ISC has
prepared the detailed business plans and installation of hardware and software systems. The
promotions for NSE were financial institutions, insurances companies, banks and SEBI capital
market ltd, Infrastructure leasing and financial services ltd and stock holding corporation ltd.
It has been set up to strengthen the move towards professionalisation of the capital market
as well as provide nation wide securities trading facilities to investors.
NSE is not an exchange in the traditional sense where brokers own and manage the
exchange. A two tier administrative set up involving a company board and a governing aboard
of the exchange is envisaged.
NSE is a national market for shares PSU bonds, debentures and government securities since
infrastructure and trading facilities are provided.
NSE - NIFTY:

The NSE on April 22, 1996 launched a new equity Index. The NSE-50. The new Index
which replaces the existing NSE-100 Index is expected to serve as an appropriate Index for the
new segment of futures and options.
Nifty " means National Index for Fifty Stocks.
The NSE-50 comprises 50 companies that represent 20 broad Industry groups with an
aggregate market capitalization of around Rs. 1,70,000 crs. All companies included in the Index
have a market capitalization in excess of Rs 500 crs each and should have traded for 85% of
trading days at an impact cost of less than 1.5%.
The base period for the index is the close of prices on Nov 3, 1995, which makes one year of
completion of operation of NSEs capital market segment. The base value of the Index has been
set at 1000.
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NSE - MIDCAP INDEX:

The NSE midcap Index or the Junior Nifty comprises 50 stocks that represents 21 board
Industry groups and will provide proper representation of the midcap segment of the Indian
capital Market. All stocks in the Index should have market capitalization of greater than Rs. 200
crs and should have traded 85% of the trading days at an impact cost of less 2.5%.
The base period for the index is Nov 4, 1996, which signifies two years for completion of
operations of the capital market segment of the operations. The base value of the Index has been
set at 1000.
Average daily turn over of the present scenario 258212 (Lacs) and number of average
daily trades 2160 (Lacs).
At present, there are 24 stock exchanges recognized under the securities contract
(regulation) Act, 1956. They are
List of Stock Exchanges recognized under the securities contract (regulation) Act, 1956
NAME OF THE STOCK EXCHANGE

YEAR

Bombay stock exchange,

Ahmedabad share and stock brokers association

1875

Calcutta stock exchange association Ltd,

1957

Delhi stock exchange association Ltd,

1957

Madras stock exchange association Ltd,

1957

Indoor stock brokers association,

1957

Bangalore stock exchange,

1958

Hyderabad stock exchange,

1963

Cochin stock exchange,

1943

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Pune stock exchange Ltd,

1978

U.P stock exchange association Ltd,

1982

Ludhiana stock exchange association Ltd,

1982

Jaipur stock exchange Ltd,

1983

Gauhathi stock exchange Ltd,

1983-84

Mangalore stock exchange Ltd,

1984

Maghad stock exchange Ltd, Patna,

1985

Bhubaneshwar stock exchange association Ltd,

1986

Over the counter exchange of India, Bombay,

1989

Saurasthra kutch stock exchange Ltd,

1989

Vsdodara stock exchange Ltd,

1990

Coimbatore stock exchange Ltd,

1991

The meerut stock exchange Ltd,

1991

1National stock exchange Ltd,

1991

Integrated stock exchange,

1991,1999

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1.3 DERIVATIVES
MEANING:
The emergence of the market for derivative products, most notably forwards, futures and
options, can be traced back to the willingness of risk-averse economic agents to guard
themselves against uncertainties arising out of fluctuations in asset prices. By their very nature,
the financial markets are marked very high degree of volatility. Through the use of derivative
products, it is possible to partially or fully transfer price risks by locking-in asset prices. As
instruments of risk management, these generally do not influence the fluctuations in the
underlying asset prices. However, by locking-in asset prices, derivative products minimize the
impact of fluctuations in asset prices on the profitability and cash flow situation of risk-averse
investors.
Derivatives are risk management instruments, which derive their value from an
underlying asset. The underlying asset can be bullion, index, share, bonds, currency, interest etc.
Annual turnover of the derivatives is increasing each year from 1986 onwards,
Year

Annual turnover

1986

146 millions

1992

453 millions

1998

1329 millions

2002 & 2003

it has reached to equivalent stage of cash market

Derivatives are used by banks, securities firms, companies and investors to hedge risks, to
gain access to cheaper money and to make profits Derivatives are likely to grow even at a faster
rate in future they are first of all cheaper to world have met the increasing volume of products
tailored to the needs of particular customers, trading in derivatives has increased even in the over
the counter markets.

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In Britain unit trusts allowed to invest in futures & options .The capital adequacy norms
for banks in the European Economic Community demand less capital to hedge or speculate
through derivatives than to carry underlying assets. Derivatives are weighted lightly than other
assets that appear on bank balance sheets. The size of these off-balance sheet assets that include
derivatives is more than seven times as large as balance sheet items at some American banks
causing concern to regulators

1.3.1 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.
In the Indian context the Securities Contracts (Regulation) Act, 1956 (SC(R) A) defines
derivative to include1. A security derived from a debt instrument, share, and loan whether secured or unsecured, risk
instrument or contract for differences or any other form of security.
2. A contract, which derives its value from the prices, or index of prices, of underlying
securities.
Derivatives are the securities under the SC(R)A and hence the trading of derivatives is
governed by the regulatory framework under the SC(R)A.

1.3.2 PARTICIPANTS IN THE DERIVATIVES MARKET

The following three broad categories of participants who trade in the derivatives market:
1. Hedgers
2. Speculators and
3. Arbitrageurs
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Hedgers:
Hedgers face risk associated with the price of an asset. They use futures or options
markets to reduce or eliminate this risk.

Speculators:
Speculators wish to bet on future movements in the price of an asset. Futures and
Options contracts can give them an extra leverage; that is, they can increase both the potential
gains and potential losses in a speculative venture.

Arbitrageurs:
Arbitrageurs are in business to take advantage of a discrepancy between prices in
two different markets.
For example, they see the futures price of an asset getting out of line with the cash price; they
will take offsetting positions in the two markets to lock in a profit.

1.3.4 FUNCTIONS OF THE DERIVATIVES MARKET:

The derivatives market performs a number of economic functions. They are:
1. Prices in an organized derivatives market reflect the perception of market participants about
the future and lead the prices of underlying to the perceived future level.
2. Derivatives, due to their inherent nature, are linked to the underlying cash markets. With the
introduction of derivatives, the underlying market witnesses higher trading volumes because
of participation by more players who would not otherwise participate for lack of an
arrangement to transfer risk.
3. Speculative trades shift to a more controlled environment of derivatives market. In the
absence of an organized derivatives market, speculators trade in the underlying cash markets.
4. An important incidental benefit that flows from derivatives trading is that it acts as a catalyst
for new entrepreneurial activity.
5. Derivatives markets help increase savings and investment in the long run. Transfer of risk
enables market participants to expand their volume of activity.

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1.3.5 TYPES OF DERIVATIVES

The most commonly used derivatives contracts are forwards, futures and options.
Here various derivatives contracts that have come to be used are given briefly:

1. Forwards
2. Futures
3. Options
4. Warrants
5. LEAPS
6. Baskets
7. Swaps
8. Swaptions

1. Forwards:
A forward contract is customized contract between two entities, where settlement
takes place on a specific date in the future at todays pre-agreed price

2. Futures:
A futures contract is an agreement between two parties to buy or sell an asset at a
certain time in the future at a certain price. Futures contracts are special types of forward
contracts in the sense that the former are standardized exchange-traded contracts.

3. Options:
Options are of two types calls and puts

Calls give the buyer the right but not the obligation to buy a given quantity of the
underlying asset, at a given price on or before.a given future date.
Puts give the buyer the right, but not the obligation to sell a given quantity of the
underlying asset at a given price on or before a given date.

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4. Warrants:
Options generally have two lives of up to one year, the majority of options traded
on options exchanges having a minimum maturity of nine months. Longer-dated options are
called warrants and are generally traded over-the-counter.
5. Leaps:
The acronym LEAPS means Long-term Equity Anticipation Securities. These are
options having a maturity of up to three years.

6. Baskets:
Basket options are options on portfolios of underlying assets. The underlying asset is
usually a moving average of a basket of assets. Equity index options are a form of basket
options.

7. Swaps:
Swaps are private agreements between two parties to exchange cash flows in the
future according to a prearranged formula. They can be regarded as portfolios of forward
contracts. The two commonly used swaps are:

Interest rate swaps: These entail swapping only the interest related cash flows
between the parties in the same currency.

Currency swaps: These entail swapping both principal and interest between the
parties, with the cash flows in one direction being in a different currency than those
in the opposite direction.

8. Swaptions:
Swaptions are options to buy or sell that will become operative at the expiry of
the options. Thus a swaption is an option on a forward swap. Rather than have calls and puts,
the swaptions markets has receiver swaptions and payer swaptions. A receiver swaption is an
option to receive fixed and pay floating. A payer swaption is an option to pay fixed and
receive floating.
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1.3.6 DERIVATIVES INSTRUMENTS IN INDIA

The first derivative product to be introduced in the Indian securities market is going to be
"INDEX FUTURES". In the world, first index futures were traded in U.S. on Kansas City Board
of Trade (KCBT) on Value Line Arithmetic Index (VLAI) in 1982.
Organized exchanges began trading options on equities in 1973, where as exchange traded
debt options did not appear until 1982, on the other hand fixed income futures began trading in
1975, but equity related futures did not begin until 1982.

1.3.7 DERIVATIVES SEGMENT IN BSE & NSE

On June 9,2000 BSE & NSE became the first exchanges in India to introduce trading in
exchange traded derivative product with the launch of index futures on sense and Nifty futures
respectively.
Index futures was follows by launch of index options in June 2001, stock options in July
2001 and stock futures in Nov 2001.Presently stock futures and options available on 41 wellcapitalized and actively traded scripts mandated by SEBI.
Nifty is the underlying asset of the Index Futures at the Futures & Options segment of NSE
with a market lot of 200 and the BSE 30 Sensex is the underlying stock index with the market lot
of 50. This difference of market lot arises due to a minimum specification of a contract value of
Rs. 2 lakhs by Securities Exchange Board of India. A contract value is contracting Index laid by
its market lot. For e.g. If Sensex is 4730 then the contract value of a futures Index having Sensex
as underlying asset will

Be 50 x 4730 = Rs. 2,36,500. Similarly if Nifty is 1462.7, its futures

contract value will be 200 x 1462.7 = Rs.2, 92,540/-.

Every transaction shall be in multiple of market lot. Thus, Index futures at NSE shall be
traded in multiples of 200 and at BSE in multiples of 50

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1.3.8 CONTRACT PERIODS:

At any point of time there will always be available near three months contract periods. For
e.g. in the month of June 2009 one can enter into either June Futures contract or July Futures
contract or August Futures Contract. The last Thursday of the month specified in the contract
shall be the final settlement date for that contract at both NSE as well BSE. Thus June 29, July
27 and August 31 shall be the last trading day or the final settlement date for June Futures
contract, July Futures Contract and August Futures Contract respectively.
When one futures contract gets expired, a new futures contract will get introduced
automatically. For instance, on 30th June, June futures contract becomes invalidated and a
September Futures Contract gets activated.

1.3.9 SETTLEMENT:
Settlement of all Derivatives trades is in cash mode. There is Daily as well as Final
Settlement.
Outstanding positions of a contract can remain open till the last Thursday of that month.
As long as the position is open, the same will be marked to Market at the Daily Settlement Price,
the difference will be credited or debited accordingly and the position shall be brought forward
to the next day at the daily settlement price. Any position which remains open at the end of the
final settlement day (i.e., last Thursday) shall be closed out by the Exchange at the Final
Settlement Price which will be the closing spot value of the underlying (Nifty or Sensex, or
respective stocks as the case may be).

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1.3.10 Regulation for Derivatives Trading

SEBI set up a 24-member committee under Chairmanship of Dr.L.C. Gupta to
develop the appropriate regulatory framework for derivatives trading in India. The committee
submitted its report in March 1998. On May 11, 1998 SEBI accepted the recommendations of
the committee and approved the phased introduction of derivatives trading in India beginning
with stock index futures. SEBI also approved the suggestive bye-laws recommended by the
committee for regulation and control of trading and settlement of derivatives contracts.
The provisions in the SC(R) A and the regulatory framework developed there under
govern trading in securities. The amendment of the SC(R) A to include derivatives within the
ambit of securities in the SC(R) A made trading in derivatives possible within the framework
of the Act.
1. Any exchange fulfilling the eligibility criteria as prescribed in the L C Gupta committee
report may apply to SEBI for grant of recognition under Section 4 of the SC(R) a, 1956 to
start trading derivatives. The derivatives exchange/segment should have a separate governing
council and representation of trading / clearing members shall be limited to maximum of
40% of the total members of the governing council. The exchange shall regulate the sales
practices of its members and will obtain approval of SEBI before start of trading in any
derivative contract
2. The exchange shall have minimum 50 members.
3. The members of an existing segment of the exchange will not automatically become the
members of derivative segment. The members of the derivative segment need to fulfill the
eligibility conditions as laid down by the L C Gupta committee.
4. The clearing and settlement of derivatives trades shall be through a SEBI approved clearing
corporation / house. Clearing corporation / houses complying with the eligibility conditions
as laid down by the committee have to apply to SEBI for grant of approval.
5. Derivative brokers/dealers and clearing members are required to seek registration from SEBI.
6. The minimum contract value shall not be less than Rs. 2 Lakh. Exchanges should also submit
details of the futures contract they propose to introduce.
7. The trading members are required to have qualified approved user and sales person who have
passed a certification programme approved by SEBI.
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While from the purely regulatory angle, a separate exchange for trading would be a
better arrangement. Considering the constraints in infrastructure facilities, the existing stock
(cash) exchanges may also be permitted to trade derivatives subject to the following conditions.

I. Trading should take place through an on-line screen based trading system.
II. An independent clearing corporation should do the clearing of the derivative market.
III. The exchange must have an online surveillance capability, which monitors positions, price
and volumes in real time so as to deter market manipulation price and position limits
should be used for improving market quality.
IV. Information about trades quantities, and quotes should be disseminated by the exchange in
the real time over at least two information-vending networks, which are accessible to
investors in the country.
V. The exchange should have at least 50 members to start derivatives trading.
VI. The derivatives trading should be done in a separate segment with separate membership;
That is, all members of the cash market would not automatically become members of the
derivatives market.
VII. The derivatives market should have a separate governing council which should not have
representation of trading by clearing members beyond whatever percentage SEBI may
prescribe after reviewing the working of the present governance system of exchanges.
VIII. The chairman of the governing council of the derivative division / exchange should be a
member of the governing council. If the chairman is broker / dealer, then he should not
carry on any broking or dealing on any exchange during his tenure.
IX. No trading/clearing member should be allowed simultaneously to be on the governing
council both derivatives market and cash market.

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FUTURES

21

2.1 FUTURES
Futures contract is a firm legal commitment between a buyer & seller in which they
agree to exchange something at a specified price at the end of a designated period of time. The
buyer agrees to take delivery of something and the seller agrees to make delivery.

2.2 STOCK INDEX FUTURES

Stock Index futures are the most popular financial futures, which have been
used to hedge or manage the systematic risk by the investors of Stock Market. They are called
hedgers who own portfolio of securities and are exposed to the systematic risk. Stock Index is
the apt hedging asset since the rise or fall due to systematic risk is accurately shown in the Stock
Index. Stock index futures contract is an agreement to buy or sell a specified amount of an
underlying stock index traded on a regulated futures exchange for a specified price for settlement
at a specified time future.
Stock index futures will require lower capital adequacy and margin requirements
as compared to margins on carry forward of individual scrips. The brokerage costs on index
futures will be much lower.
Savings in cost is possible through reduced bid-ask spreads where stocks are
traded in packaged forms. The impact cost will be much lower in case of stock index futures as
opposed to dealing in individual scrips. The market is conditioned to think in terms of the index
and therefore would prefer to trade in stock index futures. Further, the chances of manipulation
are much lesser.
The Stock index futures are expected to be extremely liquid given the speculative
nature of our markets and the overwhelming retail participation expected to be fairly high. In the
near future, stock index futures will definitely see incredible volumes in India. It will be a
blockbuster product and is pitched to become the most liquid contract in the world in terms of
number of contracts traded if not in terms of notional value. The advantage to the equity or cash
market is in the fact that they would become less volatile as most of the speculative activity
would shift to stock index futures. The stock index futures market should ideally have more

22

depth, volumes and act as a stabilizing factor for the cash market. However, it is too early to base
any conclusions on the volume or to form any firm trend.
The difference between stock index futures and most other financial futures
contracts is that settlement is made at the value of the index at maturity of the contract.

2.3 FUTURES TERMINOLOGY

Contract Size
The value of the contract at a specific level of Index. It is
Index level * Multiplier.

Multiplier
It is a pre-determined value, used to arrive at the contract size. It

is the price per index point.

Tick Size
It is the minimum price difference between two quotes
of similar nature.

Contract Month
The month in which the contract will expire.

Expiry Day
The last day on which the contract is available for trading.

Open interest
Total outstanding long or short positions in the market at any specific point in
time. As total long positions for market would be equal to total short positions, for
calculation of open Interest, only one side of the contracts is counted.

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Volume
No. Of contracts traded during a specific period of time. During a day, during a

week or during a month.

Long position
Outstanding/unsettled purchase position at any point of time.

Short position
Outstanding/ unsettled sales position at any point of time.

Open position
Outstanding/unsettled long or short position at any point of time.

Physical delivery
Open position at the expiry of the contract is settled through delivery of the

underlying. In futures market, delivery is low.

Cash settlement
Open position at the expiry of the contract is settled in cash. These contracts

Alternative Delivery Procedure (ADP) - Open position at the expiry of the contract is settled
by two parties - one buyer and one seller, at the terms other than defined by the exchange.
World wide a significant portion of the energy and energy related contracts (crude oil,
heating and gasoline oil) are settled through Alternative Delivery Procedure.

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2.4 Pay off for futures:

A Pay off is the likely profit/loss that would accrue to a market participant with change in
the price of the underlying asset. Futures contracts have linear payoffs. In simple words, it means
that the losses as well as profits, for the buyer and the seller of futures contracts, are unlimited.

Pay off for Buyer of futures: (Long futures)

The pay offs for a person who buys a futures contract is similar to the pay off for a

person who holds an asset. He has potentially unlimited upside as well as downside. Take the
case of a speculator who buys a two-month Nifty index futures contract when the Nifty
stands at 1220. The underlying asset in this case is the Nifty portfolio. When the index moves
up, the long futures position starts making profits and when the index moves down it starts
making losses
.

Pay off for seller of futures: (short futures)

The pay offs for a person who sells a futures contract is similar to the pay off for a

person who shorts an asset. He has potentially unlimited upside as well as downside. Take
the case of a speculator who sells a two-month Nifty index futures contract when the Nifty
stands at 1220. The underlying asset in this case is the Nifty portfolio. When the index moves
down, the short futures position starts making profits and when the index moves up it starts
making losses.

25

OPTIONS

26

3.1 OPTIONS

An option agreement is a contract in which the writer of the option grants the buyer of the
option the right to purchase from or sell to the writer a designated instrument at a specific price
within a specified period of time.
Certain options are shorterm in nature and are issued by investors another group of
options are long-term in nature and are issued by companies.

3.2 OPTIONS TERMINOLOGY:

Call option:
A call is an option contract giving the buyer the right to purchase the stock.

Put option:
A put is an option contract giving the buyer the right to sell the stock.

Expiration date:
It is the date on which the option contract expires.

Strike price:
It is the price at which the buyer of a option contract can purchase or sell the stock

during the life of the option

Premium:
Is the price the buyer pays the writer for an option contract.

Writer:
The term writer is synonymous to the seller of the option contract.

Holder:
The term holder is synonymous to the buyer of the option contract.

27

Straddle:
A straddle is combination of put and calls giving the buyer the right to either buy
or sell stock at the exercise price.

Strip:
A strip is two puts and one call at the same period.

Strap:
A strap is two calls and one put at the same strike price for the same period.

Spread:
A spread consists of a put and a call option on the same security for the same time
period at different exercise prices.
The option holder will exercise his option when doing so provides him a benefit over

buying or selling the underlying asset from the market at the prevailing price. These are three
possibilities.
1. In

the money:

An option is

said

to

be in

the money when it

is

advantageous to exercise it.

2. Out of the money: The option is out of money if it not advantageous to exercise it.
3. At the money: IF the option holder does not lose or gain whether he exercises his option
or buys or sells the asset from the market, the option is said to be at the money. The exchanges
initially created three expiration cycles for all listed options and each issue was assigned to one
of these three cycles.
January, April, July, October.
February, March, August, November.
March, June, September, and December.

In India, all the F and O contracts whether on indices or individual stocks are available for
one or two or three months series and they expire on the Thursday of the concerned month.
28

3.3 CALL OPTION:

An option that grants the buyer the right to purchase a designated instrument is
called a call option. A call option is a contract that gives its owner the right, but not the
obligation, to buy a specified price on or before a specified date.
An American call option can be exercised on or before the specified date only. European
options can be exercised on the specified date only.
3.4 PUT OPTION:
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. This is the opposite
of a call option, which gives the holder the right to buy shares.
A put becomes more valuable as the price of the underlying stock depreciates relative
to the strike price. For example, if you have one Mar 09 Taser 10 put, you have the right to sell
100 shares of Taser at $10 until March 2008 (usually the third Friday of the month). If shares
of Taser fall to $5 and you exercise the option, you can purchase 100 shares of Taser for $5 in
the market and sell the shares to the option's writer for $10 each, which means you make $500
(100 x ($10-$5)) on the put option. Note that the maximum amount of potential proft in this
example ignores the premium paid to obtain the put option.
3.5 FACTORS DETERMINIG OPTION VALUE:

Stock price

Strike price

Time to expiration

Volatility

Risk free interest rate

Dividend

29

3.6 DIFFERENCE BETWEEN FUTURES & OPTION:

FUTURES

OPTIONS

1) Both the parties are obligated to perform.

1) Only the seller (writer) is obligated to perform.

2) With futures premium is paid by either party.

2) With options, the buyer pays the seller a

premium.

3) The parties to futures contracts must perform

at the settlement date only. They are not 3) The buyer of an options contract can exercise
obligated to perform before that date.

any time prior to expiration date.

4) The holder of the contract is exposed to the 4) The buyer limits the downside risk to the option
entire spectrum of downside risk and had the
potential for all upside return.

premium but retain the upside potential.

5) In options premiums to be paid. But they are

5) In futures margins to be paid. They are

very less as compared to the margins.

approximate 15-20% on the current stock

price.

3.7 Advantages of option trading:

Risk management: put option allow investors holding shares to hedge against a possible
fall in their value. This can be considered similar to taking out insurance against a fall in
the share price.

Time to decide: By taking a call option the purchase price for the shares is locked in.
This gives the call option holder until the Expiry day to decide whether or exercised the
option and buys the shares. Likewise the taker of a put option has time to decide whether
or not to sell the shares.

30

Speculations: The ease of trading in and out of option position makes it possible to trade
options with no intention of ever exercising them. If investor expects the market to rise,
they may decide to buy call options. If expecting a fall, they may decide to buy put
options. Either way the holder can sell the option prior to expiry to take a profit or limit a
loss. Trading options has a lower cost than shares, as there is no stamp duty payable
unless and until options are exercised.

Leverage: Leverage provides the potential to make a higher return from a smaller initial
outlay than investing directly however leverage usually involves more risks than a direct
investment in the underlying share. Trading in options can allow investors to benefit from
a change in the price of the share without having to pay of the share.

3.8 Summary of options

Call option buyer

Call option writer (seller)

Pays premium

Receives premium

Right to exercise and buy the share

Obligation to sell shares if exercised

Profits from rising prices

Profits from falling prices or remaining

Limited losses, potentially unlimited

neutral

gain
Put option buyer

Potentially unlimited losses, limited gain

Put option writer (seller)

Pays premium

Receives premium

Right to exercise and sell shares

Obligation to buy shares if exercised

Profits from falling prices

Profits from rising prices or remaining

Limited losses, potentially unlimited

neutral

gain

31

Potentially unlimited losses, limited gain

ABOUT SHAREKHAN

32

4.1 SHAREKHAN
Sharekhan is one of India's largest and leading financial services companies. It is an
online stock trading company of SSKI Group (S.S. Kantilal Ishwarlal Securities Limited) which
has been a provider of India-based investment banking and corporate finance service for over 80
years.
SSKI caters to most of the prominent financial institutions, foreign and domestic,
investing in Indian equities. It has been valued for its strong research-led investment ideas,
superior client servicing track record and exceptional execution skills.
The key features of sharekhan are as follows:
You get freedom from paperwork.
There are instant credit and money transfer facilities.
You can trade from any net enabled PC.
After hour orders facilities.
You can go for online orders over the phone.
Timely advice and research reports
Real-time Portfolio tracking.
Information and Price alerts.
Sharekhan provides assistance and the advice like no one else could. It has created
special information tools to help answer any queries. Sharekhans first step program, built
specifically for new investors, is testament to of its commitment to being your guide throughout
your investing life cycle.
33

4.2 SHAREKHAN SERVICES:

The tag line of Sharekhan says that it is your guide to the financial jungle. As per the tag
line there are many amazing services that Sharekhan offers like technical research, fundamental
research, share shops, portfolio management, dial-n-trade, commodities trade, online services,
depository services, equity and derivatives trading (including currency trading). With
Sharekhans online trading account, you can buy and sell shares at anytime and from anywhere
you like.
With a physical presence in over 300 cities of India through more than 800 "Share
Shops" with more than 3000 employees, and an online presence through Sharekhan.com, India's
premier, it reaches out to more than 8, 00,000 trading customers.
A Sharekhan outlet online destination offers the following services:
Online BSE and NSE executions (through BOLT & NEAT terminals)
Free access to investment advice from Sharekhan's Research team
Sharekhan Value Line (a monthly publication with reviews of recommendations, stocks
to watch out for etc)
Daily research reports and market review (High Noon & Eagle Eye)
Pre-market Report (Morning Cuppa)
Daily trading calls based on Technical Analysis
Cool trading products (Daring Derivatives and Market Strategy)
Personalized Advice
Live Market Information
Depository Services: Demat Transactions
34

 Derivatives Trading (Futures and Options)

Commodities Trading
IPOs & Mutual Funds Distribution
Internet-based Online Trading: Speed Trade
Sharekhan has one of the best state-of-art web portals providing fundamental and
statistical information across equity, mutual funds and IPOs. Surfing can be done across 5,500
companies for in-depth information, details about more than 1,500 mutual fund schemes and IPO
data. Other market related details such as board meetings, result announcements, FII
transactions, buying/selling by mutual funds and much more can also be accessed.
It provides a complete life-cycle of investment solution in Equities, Derivatives,
Commodities, IPO, Mutual Funds, Depository Services, Portfolio Management Services and
Insurance. It also offers personalized wealth management services for High Net worth
individuals.
4.3 ONLINE SERVICES
The online trading account can be chosen as per trading habits and preferences, that is the
classic account for most investors and speed trade for active day traders. Sharekhan also provides
a free software called Trade tiger to all its account holders.
The Classic Account enables you to trade online for investing in Equities and
Derivatives on the NSE via sharekhan.com; it gives access to all the research content and also
comes with a free Dial-n-Trade service enabling to buy shares using the telephone.

35

Its features are:

Streaming quotes (using the applet based system)
Multiple watch lists
Integrated Banking, demat and digital contracts
Instant credit and transfer
Real-time portfolio tracking with price alerts and, of course, the assurance of secure
transactions
The Trade Tiger is a next-generation online trading product that brings the power of the
broker's terminal to your PC. It's the perfect trading platform for active day traders. Its features
are:
A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX,
NCDEX, Mutual Funds, IPOs
Multiple Market Watch available on Single Screen
Multiple Charts with Tick by Tick Intraday and End of Day Charting powered with
various Studies
Graph Studies include Average, Band- Bollinger, Know Sure Thing, MACD, RSI,
etc
Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines
User can save his own defined screen as well as graph template, that is, saving the
layout for future use
User-defined alert settings on an input Stock Price trigger
Tools available to gauge market such as Tick Query, Ticker, Market Summary,
Action Watch, Option Premium Calculator, Span Calculator
36

 Shortcut key for FAST access to order placements & reports

Online fund transfer activated with 12 Banks
Sharekhan provides you the facility to trade in Commodities through Sharekhan
Commodities Pvt. Ltd. a wholly owned subsidiary of its parent SSKI. It trades on two
major commodity exchanges of the country:
Multi Commodity Exchange of India Ltd, Mumbai (MCX) and
National Commodity and Derivative Exchange, Mumbai (NCDEX).

For trading in any commodity, initial margin of around 10% on any commodity is to be
maintained. Sharekhan has launched its own commodity derivatives micro-site. The site is
available through the Sharekhan home page www.sharekhan.com. Along with the site Sharekhan
has launched several commodity derivatives products (both research and trading) too. The
products have been listed below:
Commodities Buzz: a daily view on precious metals and agro commodities.
Commodities Beat: a summary of the days trading activity.
Traders Corner: Under commodity trading calls, there are two types of trading calls:

Rapid Fire: (short-term calls for 1 day to 5 days updated daily)

Medium-term Plays: (medium-term calls for 1 month to 3 months updated

weekly or in between if needed)

Sharekhan Xclusive: the commodity research reports and analyses (periodical).

Market Scan: the daily commodity market data and statistics (end of day).
All these products are both e-mailed as newsletters and published on the commodity
derivatives site
37

DATA ANALYSIS
&
INFERENCE

38

GMR INFRASTRUCTURE

39

5.1 GMR Infrastructure

5.1.1 GMR INFRA PROFILE
GMR Group is a Bangalore headquartered global infrastructure major with
interests in the Airports, Energy, Highways and Urban infrastructure (including SEZ). In
addition, the other focus area of the Group is the Agri-business with Sugar as its main productline. The Group is also actively engaged in the areas of Education, Health, Hygiene and
Sanitation, Empowerment & Livelihoods and Community-Based Programmes under its
Foundation wing, reaffirming its grass root presence as change agents of society in the field of
Corporate Social Responsibility. A dedicated division, the GMR Varalakshmi Foundation,
manned by committed professionals, oversees and manages these projects across India.
With its foray into the Airports sector, the Group has established itself as a front runner and
pioneer in the core infrastructure areas of the country.
Going forward, the Group will actively seek opportunities in core areas of the countrys
infrastructure development including Transportation and Property Development. All these would
be driven by a single minded path of translating the vision of the Group by building
entrepreneurial organisations that make a difference to society through creation of value.

GMR International
GMR Group seeks aggressive growth opportunities, by expanding its business bandwidth and
presence in the global market place in the areas of Energy, Airports and property development
around airports. International forays will help GMR improve earnings from new opportunities,
access international talent and raise international capital at cheaper rates.
GMR International - a separate division was formed to harness these opportunities with its
head quarters at London. GMR International will embrace the companys Values and Beliefs and
will build on its strengths to meet global standards of entrepreneurship, flexibility and
effectiveness. It will be a dedicated international organisation with responsibility for investments
and operations. As an owner, developer and operator building internationally competitive skills in
procurement, operations and maintenance it will leverage GMRs existing strengths in bidding,
financing, project management, and partnership development.
GMR International manages the Groups maiden foray into the global infrastructure
market

40

Projects:
The Sabiha Gokcen International Airport
InterGen
Island Power

Airports
Delhi International Airport (P) Limited
GMR Hyderabad International Airport Limited
Istanbul Sabiha Gokcen International Airport
Highways
Tambaram - Tindivanam
Tuni - Anakapalli
Ambala - Chandigarh
Adloor - Gundla Pochanpalli
Tindivanam - Ulunderpet
Farukhnagar - Jadcherla
Hyderabad-Vijaywada
Chennai Outer Ring Road
Agri Business
Sankili Sugar Plant
Ramdurg Sugar Complex
Haliyal Sugar Complex
Global Presence

Projects

Having proven its credentials as a leading infrastructure conglomerate in India, GMR is

expanding its operations globally. It now has presence in the following countries.
Nepal
Upper Karnali - Hydro Power Project (300 MW)
Himtal - Hydro Power Project (250 MW)

41

United Kingdom
InterGen - Energy
Netherlands
InterGen - Energy
Philippines
InterGen - Energy
Australia
InterGen - Energy
Mexico
InterGen - Energy
Istanbul, Turkey
Sabiha Gokcen International Airport - Airports
Singapore
Island Power

Company Information
GMR Infrastructure Limited was originally incorporated on May 10, 1996 as a public limited
company called Varalakshmi Vasavi Power Projects Limited in the State of Andhra Pradesh. On
May 23, 1996 we received our certificate of commencement of business. On May 31, 1999 we
changed our name to GMR Vasavi Infrastructure Finance Limited. On July 24, 2000 we changed
our name to GMR Infrastructure Limited (GIL). On October 4, 2004 we shifted our registered
office from the State of Andhra Pradesh to the State of Karnataka.
The Company is an infrastructure holding company formed to fund the capital requirements of
the GMR Groups initiatives in the infrastructure sector. GIL is engaged in development of
various infrastructure projects in power and transportation sectors through several special
purpose vehicles.

42

43

44

45

46

5.1.2 GMR INFRA MAY MONTH ANALYSIS

GMR INFRA MAY EQUITY TABLE:Symb
ol

Ser
ies

Date

Prev
Close

Open
Price

High
Price

Low
Price

Last
Price

Close
Price

Average
Price

GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA
GMRI
NFRA

EQ

4-May09
5-May09
6-May09
7-May09
8-May09
11-May09
12-May09
13-May09
14-May09
15-May09
18-May09
19-May09
20-May09
21-May09
22-May09
25-May09
26-May09
27-May09
28-May09
29-May09

113

118

119

115

116.35

116.6

116.6

117.5

122.4

115

118.85

119.3
5
115.2
5
116.1
5
117.1

120.8

122.9

113.35

116.4

116.7

114.15

116.55

117

118.4
5
117.7

112.1

118.7
5
112.9

119.6
5
117

115.9
5
111.3

117
110.5

112.4
113.4

113.6
5
122.9

137.3

145

152.9
5
158.4
5
170.2
5
168.6
5
164.9

148

EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ

Turnover in
Lacs

117.27

Total
Traded
Quantity
4966641

119.71

7553513

9042.489716

119.36

6326565

7551.337826

116.06

5089291

5906.878162

117.1

119.3
5
115.2
5
116.1
5
117.1

115.61

3900000

4508.909404

111

111.15

111.9

113.67

3316682

3770.069377

110.55

115.85

114.15

4161604

4750.46704

117.8

110.15

110.55

115.9
5
111.3

114.24

4696165

5364.980309

112.9
5
117.7

105.6

112.25

112.4

110.83

3605092

3995.469767

112.25

112.5

113.4

115.06

4462193

5134.164822

147

122.9

134.7

137.3

135.08

62439

84.340472

157.9
5
165.9
5
173

121.65

149.3

145.66

21068986

30689.75392

142.35

159.7

159.52

11364457

18129.00169

158

172.2

167.96

18201627

30570.93059

161.15

168.15

167.66

11647961

19528.54452

162.3

164.2

165.19

5937486

9808.248222

168

173.6
5
171.4
5
172.4

152.9
5
158.4
5
170.2
5
168.6
5
164.9

155.25

158.5

166.26

12411987

20636.71993

157.4
5
163.7

161.1

167.3

161.1

163.6

157.4
5
163.7

164.27

10949461

17987.06952

164

168

160.85

163.45

162.4

163.65

10002596

16368.87623

162.4

165

169.4

162

162.9

164.5
5

166.61

12791895

21312.62356

111.9

158
171
170

47

5824.518409

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts.
Open Price=118 On 4th May 09
Low Price=110.15 On 13th May 09
High Price=173.65 On 22nd May 09
Close price=164.55 On 29th May 09

In the above graph I calculate Breakeven point for GMRINFRA Stock.

Break Even Point(BEP) = (High Price + Low Price)/2
= (173.65+110.15)/2
= 141.5
Again I found margin of safety (MOS)
(1) Margin of safety (mos) = opening share value BEP
48

=118-141.5
=-23.5
So here margin of safety is negative value. So here investor gets more Loss and shorts. Here
investor can buy put options to get more profits. Investors should not go for call options at this
point
(2) Margin of safety (mos) =high share value BEP
=173.65-141.5
=32.15
So here margin of safety is Positive value. So here investor gets more profits and longs. So
at this point investor can sell their Call options to get more profis.
(3) Margin of safety (mos) =LOW share value BEP
=110.15-141.5
=-31.35
So here margin of safety is negative. so here investor gets more losses and more shorts.
Investor can sell their Put Option at this point to incur more profits.

49

GMRINFRA MAY CALL OPTION TABLE(Strike price=135)

Instrument

Symbol

Date

Expiry

GMRINFRA

Opti
on
CA

Clos
e
8.05

Settle Price

28-May-09

Strike
Price
135

3.1

Turnover in
Lacs
0

OPTSTK
OPTSTK

4-May-09

GMRINFRA

CA

5-May-09

28-May-09

135

8.05

3.55

OPTSTK

GMRINFRA

CA

6-May-09

28-May-09

135

6.85

OPTSTK

GMRINFRA

CA

7-May-09

28-May-09

135

2.2

OPTSTK

GMRINFRA

CA

8-May-09

28-May-09

135

2.1

OPTSTK

GMRINFRA

CA

11-May-09

28-May-09

135

6.8

OPTSTK

GMRINFRA

CA

12-May-09

28-May-09

135

1.45

OPTSTK

GMRINFRA

CA

13-May-09

28-May-09

135

0.65

0.65

6.78

OPTSTK

GMRINFRA

CA

14-May-09

28-May-09

135

0.65

0.65

OPTSTK

GMRINFRA

CA

15-May-09

28-May-09

135

0.65

0.6

OPTSTK

GMRINFRA

CA

18-May-09

28-May-09

135

0.65

11.15

OPTSTK

GMRINFRA

CA

19-May-09

28-May-09

135

21.4

OPTSTK

GMRINFRA

CA

20-May-09

28-May-09

135

25.9

OPTSTK

GMRINFRA

CA

21-May-09

28-May-09

135

36.2

OPTSTK

GMRINFRA

CA

22-May-09

28-May-09

135

34.35

OPTSTK

GMRINFRA

CA

25-May-09

28-May-09

135

30.1

OPTSTK

GMRINFRA

CA

26-May-09

28-May-09

135

22.65

OPTSTK

GMRINFRA

CA

27-May-09

28-May-09

135

28.75

OPTSTK

GMRINFRA

CA

28-May-09

28-May-09

135

50

OBSERVATIONS AND FINDINGS

MAY CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of GMRINFRA that is 1250 those who buy for 135 paid 3.1
Premium Per Share.
Settlement Price is 163.75
Spot price 163.75
Strike price
135.00
Amount
28.75
Premium Paid (-)
3.1
Net Profit
25.65*1250=32062.5
Buyer Profit = Rs 32062.5(Net Amount)
Because it is positive it is IN THE MONEY contract, hence buyer will get more profit,
incase spot price increase buyer profit also increases.

SELLERS PAY OFF:

It is in the money for the buyer, so it is n out of the money for seller , hence his loss is
also increases.
Strike price 135.00
Spot price 163.75
Amount
Premium Received
Loss

-28.75
3.1
-25.65*1250=-32062.5

Seller loss = Rs -32062.5(Loss)

Because it is negative it is out of the money, hence seller will get more loss, incase spot
price decreases in below strike price, seller get profit in premium level.

51

GMRINFRA MAY PUT OPTION TABLE(Strike price=135):Instrument

Symbol

Option

Date

Expiry

Settle Price

28-May-09

Strike
Price
135

OPTSTK

GMRINFRA

PA

4-May-09

OPTSTK

GMRINFRA

PA

5-May-09

28-May-09

135

18.8

OPTSTK

GMRINFRA

PA

6-May-09

28-May-09

135

21.75

OPTSTK

GMRINFRA

PA

7-May-09

28-May-09

135

20.75

OPTSTK

GMRINFRA

PA

8-May-09

28-May-09

135

19.7

OPTSTK

GMRINFRA

PA

11-May-09

28-May-09

135

23.8

OPTSTK

GMRINFRA

PA

12-May-09

28-May-09

135

20.25

OPTSTK

GMRINFRA

PA

13-May-09

28-May-09

135

24.2

OPTSTK

GMRINFRA

PA

14-May-09

28-May-09

135

23.05

OPTSTK

GMRINFRA

PA

15-May-09

28-May-09

135

22

OPTSTK

GMRINFRA

PA

18-May-09

28-May-09

135

8.7

OPTSTK

GMRINFRA

PA

19-May-09

28-May-09

135

3.95

OPTSTK

GMRINFRA

PA

20-May-09

28-May-09

135

2.35

OPTSTK

GMRINFRA

PA

21-May-09

28-May-09

135

0.85

OPTSTK

GMRINFRA

PA

22-May-09

28-May-09

135

0.6

OPTSTK

GMRINFRA

PA

25-May-09

28-May-09

135

0.15

OPTSTK

GMRINFRA

PA

26-May-09

28-May-09

135

0.15

OPTSTK

GMRINFRA

PA

27-May-09

28-May-09

135

OPTSTK

GMRINFRA

PA

28-May-09

28-May-09

135

52

21.1

OBSERVATIONS AND FINDINGS

MAY PUT OPTION

BUYERS PAY OFF:

Those who have purchased put option at a strike price 135, the premium payable is 21.1.
On the expiry date the spot market price enclosed at 155.95.
Strike Price 135
Spot price 155.95
Net Pay Off -20.95*1250=-26187.5
Already Premium paid is 21.1
So, he get loss up to Rs 26187.5
Because it is negative, out of the money contract, hence buyer gets more loss, incase spot price
decrease in below strike price, buyer get profit in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if he is in profit and also seller has to get
total profit.
Spot Price 155.95
Strike Price 135
Net Pay off
20.95*1250=26187.5
Already Premium Received 21.1
So, he can get profit up to Rs 26187.5
Because it is positive, in the money Contract, hence seller gets more profit, incase Spot price
decrease in below strike price seller can get loss in premium.

53

Price

GMR(May Options) Strike Price=135

180
160
140
120
100
80
60
40
20
0

Put Price
Call Price
Average GMR Price

Date

From the above graph You can see that there is a drastic increase in share price of
GMRINFRA due to QIP issue $500 million on May 14th 09. So that is the reason share price of
GMRINFRA has increased drastically.
From the above news investors can buy call options to book profits in future. So in the
above graph we can see that the GMRINFRA call prices has been increased from 14th may
onwards .So its in the money for buyers who buy the call option. Its out of the money for the
sellers of the call option.
By above graph we can get that Put Price is reverse to the Spot price. If the Spot price
increases then put prices get decreases and if the spot price decreases then put prices starts
increasing, So these both are inversely proportional to each other.

54

GMRINFRA MAY FUTURE ANALYSIS:The Objective of this analysis is to evaluate the profit/loss position futures . This analysis is based on
sample data taken of GMR INFRA scrip. This analysis considered the May Contract on GMRINFRA.
The lot size of GMRINFRA is 1250,the time period in which this analysis done is from 4-05-2009 to 2805-2009.
Instru
ment
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK

Symbo
l
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA
GMRIN
FRA

Date

Expiry

4-May09
5-May09
6-May09
7-May09
8-May09
11-May09
12-May09
13-May09
14-May09
15-May09
18-May09
19-May09
20-May09
21-May09
22-May09
25-May09
26-May09
27-May09
28-May09

28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09

Ope
n
114.
8
115.
6
119
116
116.
4
117.
5
112.
5
116.
25
108
113.
5
130
144
150.
55
160
171.
8
170.
7
165
162.
9
164.
05

Hig
h
117
.45
122
122
.25
117
.5
117
118
.7
116
.5
117
.5
112
.9
117
.3
137
.9
156
165
.8
174
.1
174
172
172
.75
167
168
.4

Low

Close

LTP

Settle
Price
115.85

No. of
contracts
1349

Turnover in
acs
7819.73

Open Int

113.
9
115.
6
112.
2
113.
2
111.
1
110.
2
110.
2
110.
35
106.
7
112.
25
126.
2
121

115.85

115.7

115.3
5
118.3
5
115.5
5
116.4

119

2680

15975.69

14290000

114.6

2351

13944.95

13865000

115.7

1331

7675.46

14410000

116.25

116.2

116.25

1505

8628.95

13980000

111.35

110.6

111.35

1129

6389.69

14010000

115.85

115.8

115.85

1521

8651.9

14605000

111

111.0
5
112.4
5
112.4

111

1614

9199.92

14660000

112.35

1210

6685.31

14835000

113.25

1281

7353.81

14650000

133.8
5
150

133.65

56

372.71

14590000

152.95

5193

37561.15

13130000

149.
9
159

159.55

159.55

3652

29226.09

10380000

171.95

161.3
5
173.4

171.95

7575

64043.81

13000000

161.
7
162.
8
155.
25
162.
15
160.
95

169.7

169.2

169.7

4733

39911.74

12290000

165.5

165.5

2175

18036.04

10775000

157.65

4685

39076.79

8760000

164.05

164.9
5
158.9
5
164.5

164.05

2533

20823.31

7075000

162.4

162.4

162.4

2779

22805.69

2320000

119
114.6

112.35
113.25
133.65
152.95

157.65

55

13775000

210
180
150
120
90
60
30
0

Average GMR Price

28-May-09

26-May-09

24-May-09

22-May-09

20-May-09

18-May-09

16-May-09

14-May-09

12-May-09

10-May-09

08-May-09

06-May-09

Future Price

04-May-09

Price

GMRINFRA(May Futures)

Date

Future Market
BUYER

SELLER

12/05/09(buying)

115.85

115.85

28/05/09(Closing Period)

162.4

162.4

Profit = 46.55
Profit 46.55*1250=58187

Loss = 46.55
Loss 46.55*1250=58187

Because buyer Future price will increase so, profit also increases. Seller Future price also
increases so he can get loss. Incase seller Future will decreases, he can get profit.
The closing Price of GMRINFRA at the end of contract period is 162.4 and this is
considered as settlement price.

56

5.1.3 GMR INFRA JUNE MONTH ANALYSIS

GMRINFRA JUNE EQUITY:Symbol

Seri
es

Date

Prev
Close

Open
Price

High
Price

Low
Price

Last
Price

Close
Price

Average
Price

GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA
GMRINF
RA

EQ

1-Jun09
2-Jun09
3-Jun09
4-Jun09
5-Jun09
8-Jun09
9-Jun09
10-Jun09
11-Jun09
12-Jun09
15-Jun09
16-Jun09
17-Jun09
18-Jun09
19-Jun09
22-Jun09
23-Jun09
24-Jun09
25-Jun09
26-Jun09
29-Jun09
30-Jun09

164.55

167

176.4

162.55

175.2

175.1

175.1

178.9

180.85

168.1

172.2

172.9

176.9

177.35

167.15

172.75

172.1

179.9

177.75

180

170.55

EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ

Turnover in
Lacs

171.15

Total
Traded
Quantity
19950076

172.9

173.62

15822276

27470.65369

171.95

172.75

173.15

11234059

19451.91789

172

178

177.75

177.94

16706677

29728.11388

183.5

169.05

170.45

170.55

177.04

17578054

31120.95275

174.9

174.9

156.7

157.75

160.2

165.28

16210921

26793.31401

160.2

159.8

170

149.05

167.35

166.55

161.3

19634278

31670.47058

166.55

169

172

158

162.9

162.55

165.35

12369000

20452.47894

162.55

163.4

145.36

136

137.45

138

147.29

14231441

22669.03497

138

157

163.2

152.4

158.8

159.45

158.88

23539810

37400.17848

159.45

155

157

146

148.05

147.65

150.89

13210538

19933.32656

147.65

145.1

153

142.1

150.6

151.35

149.6

11553437

17284.0867

151.35

151

154

142.1

143.95

143.95

148.91

10745434

16001.49497

143.95

145

146.8

137.2

143.85

143.15

142

11585108

16450.62817

143.15

145.05

148.9

141.8

147.95

147.3

146

8967831

13093.16327

147.3

149.9

151

138.65

139

139.75

144.75

11218177

16237.97072

139.75

135.1

142.7

134.45

138.25

138.6

139.05

14718034

20464.88749

138.6

140

142.3

135.7

139.15

139.2

139.45

11490518

16022.96305

139.2

140.35

141.5

133.25

135.45

134.75

136.88

13960618

19108.99344

134.75

137

139.55

134.1

137.35

136.75

137.11

9372467

12850.29593

136.75

138.15

157.25

138.15

154.35

155.15

151.77

43432666

65915.85738

155.15

155.9

157.25

140.1

141.35

141.85

145.57

23533314

34256.29143

57

34144.15905

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts.
Open Price=167 On 1st June 09
Low Price=133.25 On 5th June 09
High Price=183.5 On 25th June 09
Close price=141 On 30th June 09

In the above graph I calculated Break Even point for GMRINFRA Stock for June
Month.
Break Even Point(BEP) = (High Price + Low Price)/2
= (183.5+133.25)/2
= 158.37
58

Again I found margin of safety (MOS)

(1) Margin of safety (mos) = opening share value BEP
=167-158
=9
So here margin of safety is Positive value. So here investor gets more profits and longs.
Investor can buy call options to get more profits. Investors should not go for put options at this
point
(2) Margin of safety (mos) =high share price BEP
=183-158
=25
So here margin of safety is Positive value. So here investor gets more profits and longs. So
at this point investor can sell their Call options to get more profits.
(3) Margin of safety (mos) =Low share value BEP
=133.25-158
=-24.75
So here margin of safety is negative. So here investor gets more losses and shorts. Investor
can sell their Put Option at this point to incur more profits.

59

GMRINFRA JUNE CALL OPTION TABLE(Strike Price=155) :Instrument

Symbol

Option

Date

Expiry

OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK

GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA

CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA

1-Jun-09
2-Jun-09
3-Jun-09
4-Jun-09
5-Jun-09
8-Jun-09
9-Jun-09
10-Jun-09
11-Jun-09
12-Jun-09
15-Jun-09
16-Jun-09
17-Jun-09
18-Jun-09
19-Jun-09
22-Jun-09
23-Jun-09
24-Jun-09
25-Jun-09

25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09

60

Strike
Price
155
155
155
155
155
155
155
155
155
155
155
155
155
155
155
155
155
155
155

Settle Price
29.4
27.05
26.2
29.3
23.55
15.85
19.45
16.15
12.4
12.95
6.1
7.05
3.75
2.85
3.6
0.55
0.15
0.05
0

OBSERVATIONS AND FINDINGS

JUNE CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of GMRINFRA that is 1250 those who buy for 155 paid 29.4
Premium Per Share.
Taken Spot price on 11th june 09 is 138.Such as Call option is sold on 11th June
Spot price 138.00
Strike price
155.00
Amount
-17
Net Loss
-17*1250=-21250
Buyer Loss = Rs 21250(Net Amount)
Because it is negative it is OUT OF THE MONEY contract, hence buyer will get more
Loss, incase spot price decreases buyer Loss also increases.

SELLERS PAY OFF:

It is OUT OF THE MONEY for the buyer, so it is IN THE MONEY for seller , hence his
Profit increases.
Strike price 155.00
Spot price 138.00
Amount

17

Profit 17*1250=21250
Seller Profit = Rs 21250(Profit)
Because it is positive so it is IN THE MONEY, hence seller will get more profit, incase
spot price increases in above strike price, seller get loss in premium level.

61

GMRINFRA JUNE PUT OPTION TABLE(Strike Price=155):-

Instrument
OPTSTK
OPTSTK
OPTSTK
PTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK

Symbol
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA

Option
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA

Date
1-Jun-09
2-Jun-09
3-Jun-09
4-Jun-09
5-Jun-09
8-Jun-09
9-Jun-09
10-Jun-09
11-Jun-09
12-Jun-09
15-Jun-09
16-Jun-09
17-Jun-09
18-Jun-09
19-Jun-09
22-Jun-09
23-Jun-09
24-Jun-09
25-Jun-09

62

Expiry
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09

Strike Price
155
155
155
155
155
155
155
155
155
155
155
155
155
155
155
155
155
155
155

Settle Price
8.9
8.75
8.05
6.2
7.65
10.4
7.6
8.35
9.8
8.25
13.3
10.55
14.65
14.6
11.2
15.75
16.55
15.8
0

OBSERVATIONS AND FINDINGS

JUNE PUT OPTION
BUYERS PAY OFF:
Those who have purchase put option at a strike price 135, the premium payable is 8.9.
On the expiry date the spot market price enclosed at 155.95.
Strike Price
Spot price
Amount
Premium Paid(-)
Profit

155
139.2
15.8
8.9
6.9*1250=8625

So, he got profit up to Rs 8625

Because it is positive, IN THE MONEY contract, hence buyer gets profit, incase spot price
increases above strike price, buyer get loss in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if buyer is in profit and also seller has to get
total loss.
Spot Price 139.2
Strike Price 155
Amount
-15.8
Premium received (+) 8.9
Loss
-6.9*1250=-8625
Already Premium Received
So, he can get Loss up to Rs 8625
Because it is Loss, OUT OF THE MONEY Contract, hence seller gets more Loss , incase Spot
price increases above strike price seller can get profit in premium.

63

GMRINFRA JUNE FUTURE ANALYSIS:-

The Objective of this analysis is to evaluate the profit/loss position futures . This analysis is
based on sample data taken of GMR INFRA scrip. This analysis considered the May Contract on
GMRINFRA. The lot size of GMRINFRA is 1250,the time period in which this analysis done is
from 1-06-2009 to 25-06-09
Instru
ment
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK

Symbol

Date

Expiry

GMRINFRA

1-Jun09
2-Jun09
3-Jun09
4-Jun09
5-Jun09
8-Jun09
9-Jun09
10Jun-09
11Jun-09
12Jun-09
15Jun-09
16Jun-09
17Jun-09
18Jun-09
19Jun-09
22Jun-09
23Jun-09
24Jun-09
25Jun-09

25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09

GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA

Op
en
167
.8
177
.9
175
.3
171
.9
181
174
157
168
163
.1
159
157
.4
143
150
.7
143
145
148
.5
136
.9
140
.3
141
.3

Hig
h
177
.4
178
.75
177
.75
10.
5
183
.65
174
168
.3
170
.75
164
.25
163
.65
157
.4
153
.35
154
.15
146
.45
148
.4
150
.55
142
.8
142
.7
141
.8

Lo
w
162
168
.2
167
.3
171
.9
170
155
.1
148
.65
157
.15
155
.5
152
.15
145
.2
142
.25
140
.35
136
.65
141
.25
138
.8
135
.1
136
133
.4

Close

LTP

No. of
contracts
9497

Turnover
in lacs
81453.39

Open Int

175.95

Settle
Price
176.05

176.0
5
173.5

173.05

173.5

6734

58547.98

22640000

173.4

172.35

173.4

5241

45511.33

22395000

178.3

178.5

178.3

7396

65900.83

22000000

171.3
5
158.3

170.75

171.35

6208

55215.25

22280000

156

158.3

5362

44171.44

21655000

166.0
5
162.0
5
157.5
5
159.4

166.8

166.05

7813

62709.57

25005000

162.95

162.05

4651

38265.41

25320000

157.6

157.55

4445

35463.05

26475000

159.25

159.4

11438

90979.06

30380000

147.3
5
151.5
5
143.1

147.5

147.35

5372

40518.95

29600000

150.7

151.55

4175

31211.01

29440000

143.15

143.1

4368

32499.43

28370000

142.8

144

142.8

5375

38053.13

25490000

146.8

147.6

146.8

4437

32290.93

23350000

139.9

139.3

139.9

5283

38225.04

19820000

139.3
5
139.7
5
134.7

138.8

139.35

5754

40174.64

16190000

139.65

139.75

5100

35670.08

10010000

134.7

134.75

3570

24630.91

3890000

64

23635000

200
180
160
140
120
100
80
60
40
20
0

Average GMR Price

25-Jun-09

23-Jun-09

21-Jun-09

19-Jun-09

17-Jun-09

15-Jun-09

13-Jun-09

11-Jun-09

09-Jun-09

07-Jun-09

05-Jun-09

03-Jun-09

Future Price

01-Jun-09

Price

GMR(June Futures)

Date

Future Market

12/06/09(buying)
26/06/09(Closing Period)

BUYER

SELLER

159.4

159.4

134.7
Loss = 24.7

Loss

24.7*1250=30875

134.7
Profit = 24.7
Profit 24.7*1250=30875

Because buyer Future price will decreases so, loss also increases. Seller Future price
decreases so he can get profit. Incase seller Future will increases, he can get Loss.
The closing Price of GMRINFRA at the end of contract period is 134.7 and this is
considered as settlement price.

65

PUNJAB NATIONAL BANK

66

5.2 PUNJAB NATIONAL BANK

5.2.1 PROFILE
With over 38 million satisfied customers and 4668 offices, PNB has continued to
retain its leadership position among the nationalized banks. The bank enjoys strong
fundamentals, large franchise value and good brand image. Besides being ranked as one of
India's top service brands, PNB has remained fully committed to its guiding principles of sound
and prudent banking. Apart from offering banking products, the bank has also entered the credit
card & debit card business; bullion business; life and non-life insurance business; Gold coins &
asset management business, etc.
Since its humble beginning in 1895 with the distinction of being the first Indian bank
to have been started with Indian capital, PNB has achieved significant growth in business which
at the end of March 2009 amounted to Rs 3,64,463 crore. Today, with assets of more than Rs
2,46,900 crore, PNB is ranked as the 3rd largest bank in the country (after SBI and ICICI Bank)
and has the 2nd largest network of branches (4668 including 238 extension counters and 3
overseas offices).During the FY 2008-09, with 39% share of low cost deposits, the bank
achieved a net profit of Rs 3,091 crore, maintaining its number ONE position amongst
nationalized banks. Bank has a strong capital base with capital adequacy ratio as per Basel II at
14.03% with Tier I and Tier II capital ratio at 8.98% and 5.05% respectively as on March09. As
on March09, the Bank has the Gross and Net NPA ratio of only 1.77% and 0.17% respectively.
During the FY 2008-09, its ratio of priority sector credit to adjusted net bank credit at 41.53% &
agriculture credit to adjusted net bank credit at 19.72% was also higher than the respective
national goals of 40% & 18%.
PNB has always looked at technology as a key facilitator to provide better customer
service and ensured that its IT strategy follows the Business strategy so as to arrive at Best
Fit. The bank has made rapid strides in this direction. Alongwith the achievement of 100%
branch computerization, one of the major achievements of the Bank is covering all the branches
of the Bank under Core Banking Solution (CBS), thus covering 100% of its business and
providing Anytime Anywhere banking facility to all customers including customers of more
than 2000 rural branches. The bank has also been offering Internet banking services to the
customers of CBS branches like booking of tickets, payment of bills of utilities, purchase of
airline tickets etc
Towards developing a cost effective alternative channels of delivery, the bank with
more than 2150 ATMs has the largest ATM network amongst Nationalized Banks.
With the help of advanced technology, the Bank has been a frontrunner in the industry so far as
the initiatives for Financial Inclusion is concerned. With its policy of inclusive growth in the
Indo-Gangetic belt, the Banks mission is Banking for Unbanked. The Bank has launched a
drive for biometric smart card based technology enabled Financial Inclusion with the help of
Business Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile
customer. The BC/BF will address the outreach issue while technology will provide cost
effective and transparent services.

67

The Bank has started several innovative initiatives for marginal groups like
rickshaw pullers, vegetable vendors, diary farmers, construction workers, etc. The Bank has
already achieved 100% financial inclusion in 21,408 villages.
Backed by strong domestic performance, the bank is planning to realize its global
aspirations. In order to increase its international presence, the Bank continues its selective foray
in international markets with presence in Hongkong, Dubai, Kazakhstan, UK, Shanghai,
Singapore, Kabul and Norway. A second branch in Hongkong at Kowloon was opened in the
first week of April09. Bank is also in the process of establishing its presence in China, Bhutan,
DIFC Dubai, Canada and Singapore. The bank also has a joint venture with Everest Bank Ltd.
(EBL), Nepal. Under the long term vision, Bank proposes to start its operation in Fiji Island,
Australia and Indonesia. Bank continues with its goal to become a household brand with global
expertise.
Amongst Top 1000 Banks in the World, The Banker listed PNB at 250th place.
Further, PNB is at the 1166th position among 48 Indian firms making it to a list of the worlds
biggest companies compiled by the US magazine Forbes.

Financial Performance:
Punjab National Bank continues to maintain its frontline position in the Indian
banking industry. In particular, the bank has retained its NUMBER ONE position among the
nationalized banks in terms of number of branches, Deposit, Advances, total Business, operating
and net profit in the year 2008-09. The impressive operational and financial performance has
been brought about by Banks focus on customer based business with thrust on SME,
Agriculture, more inclusive approach to banking; better asset liability management; improved
margin management, thrust on recovery and increased efficiency in core operations of the Bank.
The performance highlights of the bank in terms of business and profit are shown below:

Parameters

Mar'07 Mar'08

Mar'09

CRAR

Operating Profit*

3617

4006

5744

26.02

Net Profit*

1540

2049

3091

41.67

Deposit

139860 166457

209760

22.47

Advance

96597 119502

154703

26.55

Total Business

236456 285959

364463

24.15

68

69

70

71

72

73

74

5.2.2 PNB MAY MONTH ANALYSIS

PNB MAY EQUITY TABLE:Sym
bol

Serie
s

Date

Prev
Close

Open
Price

High
Price

Low
Price

Last
Price

Close
Price

Averag
e Price

Turnover in
Lacs

497.77

Total
Traded
Quantity
2609220

PNB

EQ

477.9

494.4

506.5

503.3

EQ

503.3

509.9

520

PNB

EQ

506

519.8

PNB

EQ

503.8
5
506.1

510

530

PNB

EQ

520.2

532

502.
5
506.
55
529.
3
528

PNB

EQ

526.2

534.7

PNB

EQ
EQ

522.1
5
550.3

553.5

PNB

524.7
5
528.7
5
522.1
5
550.1

485.
55
492.
4
503.
65
508.
35
512.
1
512

504

PNB

EQ

555

PNB

EQ

565

571.5
5
589

PNB

EQ

620

680

PNB

EQ

562.7
5
562.2
5
574.7
5
662.8

515.
1
545.
35
540.
55
561.
6
620

550.
45
565

PNB

700

725

PNB

EQ

689.4

689

708.5

PNB

EQ

697

EQ

670

683

PNB

EQ

671.5

671.5

PNB

EQ

676.6
5
668.7
5
663.1
5
658.7

689

PNB

625.7

668.9

PNB

EQ
EQ

PNB

EQ

642.8
5
639.6
5
664.3

643

PNB

4-May09
5-May09
6-May09
7-May09
8-May09
11May-09
12May-09
13May-09
14May-09
15May-09
18May-09
19May-09
20May-09
21May-09
22May-09
25May-09
26May-09
27May-09
28May-09
29May-09

503.8
5
506.1

506.74

1981817

10042.75586

510.51

1732069

8842.385504

524.7
5
528.7
5
522.1
5
550.1

520.17

1153700

6001.256074

522.01

1181648

6168.310954

522.44

1209101

6316.875369

539.31

2309184

12453.74827

562.07

2296752

12909.26984

563

2503026

14092.03063

572.53

2465576

14116.18189

665

562.7
5
562.2
5
574.7
5
662.8

651.83

33068

215.548411

665

695

689.4

694.14

3124143

21685.98096

679

676.6
5
668.7
5
663.1
5
642.8
5
664.3

689.33

1865804

12861.63709

685.57

1894595

12988.77185

665.84

1137015

7570.647807

647.54

1350731

8746.542945

661.5

597170

3950.253605

669

666.
15
663.
1
645.
6
637.
8
625.
7
635

649.99

679608

4417.400963

661

666

650

657

639.6
5
658.7

659.28

745123

4912.4816

670.1

676

662

670.
1

670.8

669.64

690021

4620.679415

574.5

521

563
577

665
659.
85
643.
05
668.
1
636

75

12987.88804

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and
Puts.
Open Price=494 On 4th May 09
Low Price=485 On 4th May 09
High Price=725 On 19nd May 09
Close price=670 On 29th May 09

In the above graph I calculate Breakeven point for GMRINFRA Stock.

Break Even Point(BEP) = (High Price + Low Price)/2
= (725+485)/2
= 605
Again I found margin of safety (MOS)
(1) Margin of safety (mos) = opening share value BEP
=494-605
76

=-111
So here margin of safety is negative value. So here investor gets more Loss and shorts. Here
investor can buy put options to get more profits. Investors should not go for call options at this
point
(2) Margin of safety (mos) =high share value BEP
=725-605
=120
So here margin of safety is Positive value. So here investor gets more profits and longs. So
at this point investor can sell their Call options to get more profis.
(3) Margin of safety (mos) =LOW share value BEP
=485-605
=-120
So here margin of safety is negative. so here investor gets more losses and more shorts.
Investor can sell their Put Option at this point to incur more profits.

77

PNB MAY CALL OPTION TABLE(Strike Price=580):Instrument

OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK

Symbol
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB

Option
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA

Date
4-May-09
5-May-09
6-May-09
7-May-09
8-May-09
11-May-09
12-May-09
13-May-09
14-May-09
15-May-09
18-May-09
19-May-09
20-May-09
21-May-09
22-May-09
25-May-09
26-May-09
27-May-09
28-May-09

Expiry
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09

78

Strike Price
580
580
580
580
580
580
580
580
580
580
580
580
580
580
580
580
580
580
580

Settle Price
19.15
17.35
16.1
20.7
20.1
14.45
23.85
27.45
25.05
22.5
89.7
115.5
102.5
93.85
87.25
65
59.75
78.8
0

OBSERVATIONS AND FINDINGS

MAY CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of PNB that is 300 those who buy for 580 paid 19.15 Premium Per
Share.
Settlement Price is 639.65
Spot price
639.65
Strike price
580.00
Amount
59.65
Premium Paid (-)
19.15
Net Profit
40.5*300=12150
Buyer Profit = Rs 12150(Net Amount)
Because it is positive it is IN THE MONEY contract, hence buyer will get more profit,
incase spot price increase buyer profit also increases.

SELLERS PAY OFF:

It is in the money for the buyer, so it is n out of the money for seller , hence his loss is
also increases.
Strike price 580.00
Spot price 639.65
Amount
Premium Received
Loss

-59.65
19.15
-40.5*300=-12150

Seller loss = Rs -12150(Loss)

Because it is negative it is out of the money, hence seller will get more loss, incase spot
price decreases in below strike price, seller get profit in premium level.
79

PNB MAY PUT OPTION TABLE(Strike Price=580):Instrument

OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK

Symbol
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB

Option
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA

Date
4-May-09
5-May-09
6-May-09
7-May-09
8-May-09
11-May-09
12-May-09
13-May-09
14-May-09
15-May-09
18-May-09
19-May-09
20-May-09
21-May-09
22-May-09
25-May-09
26-May-09
27-May-09
28-May-09

Expiry
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09
28-May-09

80

Strike Price
580
580
580
580
580
580
580
580
580
580
580
580
580
580
580
580
580
580
580

Close
84.9
84.9
84.9
84.9
84.9
84.9
84.9
84.9
84.9
84.9
84.9
84.9
84.9
84.9
84.9
84.9
84.9
84.9
84.9

Settle
94.1
Price
91.75
88.55
74.6
70.05
71.2
52.75
43.7
41.85
33.55
11.3
5.5
5.35
4.65
3.75
2
0.9
0.05
0

OBSERVATIONS AND FINDINGS

MAY PUT OPTION

BUYERS PAY OFF:

Those who have purchase put option at a strike price 580, the premium payable is 94.1
On 18th May 09 the spot price enclosed is 662.8 .here this put option sold on 18th may
09.
Strike Price 580
Spot price 662.8
Net Pay Off -82.8*300=-24840
Already Premium paid is 94.1
So, he get loss up to Rs 24840
Because it is negative, out of the money contract, hence buyer gets more loss, incase spot price
decrease in below strike price, buyer get profit in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if he is in profit and also seller has to get
total profit.
Spot Price 662.8
Strike Price 580
Net Pay off
82.8*300=24840
Already Premium Received 94.1
So, he can get profit up to Rs 24840
Because it is positive, in the money Contract, hence seller gets more profit, incase Spot price
decrease in below strike price seller can get loss in premium.

81

Price

PNB(May Options) strike Price=580

750
700
650
600
550
500
450
400
350
300
250
200
150
100
50
0

SSS

Average PNB Price

CALL price
Put price

Date

Punjab national bank minting money On 12th may 09 so its volumes are increasing. On
12 may 09 Punjab touched an intraday high of Rs 549.50 and an intraday low of Rs 508.40. At
1:45 pm, the share was quoting at Rs 547.20, up Rs 28.10, or 5.41%. So from may 12th Onwards
there is a drastic increase in Share price of PNB. So that the call option values also starts
increasing and put option values decreased from 12th may onwards.
th

On 12th May there is drastic increase in total turnover in lacs from 6316.87 on 11th May 09
to 12456.74 on 12th May 09. Traded quantity increased from 12,09,101 on may 11th 09 to
23,09,184 on 12th may 09. So the share price of PNB started increasing from 12th may 09.
On 20th may 09 PNB announced it will disinvest 26% stake in PNB Housing Finance to
Dawnay Day. So the share price decreased from 20th may onwards. Then call option values
started decreasing, put options values started increasing.

82

PNB MAY FUTURES:Instr

ume
nt
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK

Sym
bol

Date

Expiry

Ope
n

High

Low

Close

LTP

Settle
Price

PNB

4-May09
5-May09
6-May09
7-May09
8-May09
11May-09
12May-09
13May-09
14May-09
15May-09
18May-09
19May-09
20May-09
21May-09
22May-09
25May-09
26May-09
27May-09
28May-09

28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09

484.
9
499

502.9

514.4
5
523

549.9
5
568.8

507.
25
506.
5
505.
4
512.
2
542

498.8
5
499.7
5
502.7
5
519.8
5
523.2

497.
15
500

503.
3
509.
85
523.
8
525.
5
515.
8
548

481.
5
489.
3
498

543

563.8

536

515.4
5
547.2
5
554.7
5
556.7

558.
1
658.
9
719.
7
680

582.9

555.
2
658.
9
674

572.9
5
682.5

680.5

680

698

655.
25
664

680.7

648

659.5

670.
2
663.
2
647.
25
638.
15
630

648

664

661.5

661

668.4

645.
3
653.
6

PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB

518

527.4
5
528.6

687
747
710

666

689.3

668.4
663.1
644.0
5
634.4

Turnover
in lacs

Open Int

498.85

No. of
contrac
ts
2947

8725.53

1602000

499.75

3119

9415.69

1594800

504.
7
522.
25
525

502.75

3276

9949.45

1744200

519.85

2423

7491.64

1746000

523.2

3050

9465.21

1978800

516.
4
547.
3
551.
05
556.
5
575.
7
685.
05
686.
2
683.
1
663.
2
660.
8
642.
1
633.
25
660

515.45

2597

8045.32

2088600

547.25

3899

12452.47

2382600

554.75

3816

12752.89

2509800

556.7

3215

10710.8

2779200

572.95

3595

12325.3

2811000

682.5

38

154.26

2803800

689.3

4601

19195.66

2431800

680.5

2683

11095.09

2452200

668.4

3335

13711.66

2196600

663.1

3158

12590.17

1813200

644.05

3350

13020.47

1587000

634.4

2059

8012.99

1307400

661.5

1941

7661.76

1109400

664.3

1999

7934.09

663000

664.5 664.
5

83

Price

PNB(May FUTURES) Strike Price=580

800
700
600
500
400
300
200
100
0

Average PNB Price

Future Price

Date

Future Market
BUYER

SELLER

12/05/09(buying)

547.25

547.25

28/05/09(Closing Period)

664.5

664.5

Profit = 117.25

Loss =117.25

Profit 145.2*300=35175

Loss 117.25*300=35175

Because buyer Future price will increase so, profit also increases.Seller Future price also
increases so he can get loss. Incase seller Future will decreases, he can get profit.
The closing Price of PNB at the end of contract period is 664.5 and this is considered as
settlement price.

84

5.2.3 PNB JUNE MONTH ANALYSIS

PNB JUNE EQUITY TABLE:Symbo
l
PNB

Serie
s
EQ

PNB

Date
1-Jun-09

Prev
Close
670.8

Open
Price
684.4

High
Price
684.4

Low
Price
658.55

EQ

2-Jun-09

663.5

674

674.4

PNB

EQ

3-Jun-09

646.3

650.1

PNB

EQ

4-Jun-09

657.2

PNB

EQ

5-Jun-09

PNB

EQ

PNB

667

Close
Price
663.5

Average
Price
668.62

633.3

648.3

646.3

648.03

664.45

641

658

657.2

651.67

649.8

665

623.35

660.9

661.65

647.62

661.65

666

670

648.3

652.05

654.25

661

8-Jun-09

654.25

650

659.85

595.35

598

606.45

618.81

EQ

9-Jun-09

606.45

601.05

624.9

590.1

615.1

610.85

612.97

PNB

EQ

10-Jun-09

615.1

612

638.5

612

632.1

636

628.5

PNB

EQ

11-Jun-09

636

638

638

606

614

612.65

615.23

PNB

EQ

12-Jun-09

612.65

614

632

590.2

592.9

593

602.32

PNB

EQ

15-Jun-09

593

583

617.9

583

613.95

611.4

606.93

PNB

EQ

16-Jun-09

611.4

605

634.85

598.2

629.8

630.85

625.96

PNB

EQ

17-Jun-09

630.85

634.85

647

605

612

600

633.88

PNB

EQ

18-Jun-09

600

618.7

640

612

619

617.2

627.16

PNB

EQ

19-Jun-09

617.2

639.7

645.85

624.05

645

642.05

634.12

PNB

EQ

22-Jun-09

642.05

646.85

659.8

645

645

648.7

652.44

PNB

EQ

23-Jun-09

648.7

635

647

620.3

621

625.15

630.16

PNB

EQ

24-Jun-09

625.15

628

631.8

620.1

623

623.7

626.18

PNB

EQ

25-Jun-09

623.7

640

647.7

626

631

631.45

633.5

PNB

EQ

26-Jun-09

631.45

633.15

667

620.7

649

655.2

646.17

PNB

EQ

29-Jun-09

655.2

655.55

689.9

655

676.95

680.05

675.28

PNB

EQ

30-Jun-09

680.05

683

694

673.5

679

677.75

684.69

85

Last
Price

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and
Puts.
Open Price=684 On 1st June 09
Low Price=583 On 15th June 09
High Price= 694 On 30th June 09
Close price=677 On 30th June 09

In the above graph I calculated Break Even point for GMRINFRA Stock for June Month.
Break Even Point(BEP) = (High Price + Low Price)/2
= (694+583)/2
= 638

86

Again I found margin of safety (MOS)

(1) Margin of safety (mos) = opening share value BEP
=684-638
=46
So here margin of safety is Positive value. So here investor gets more profits and longs.
(2) Margin of safety (mos) =high share price BEP
=694-638
=56
So here margin of safety is Positive value. So here investor gets more profits and longs. So
at this point investor can sell their Call options to get more profits.
(3) Margin of safety (mos) =Low share value BEP
=583-638
=-55
So here margin of safety is negative. So here investor gets more losses and shorts. Investor
can sell their Put Option at this point to incur more profits.

87

PNB JUNE PUT OPTION(Strike Price=640):Instrument

OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK

Symbol
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB

Option
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA
PA

Date
1-Jun-09
2-Jun-09
3-Jun-09
4-Jun-09
5-Jun-09
8-Jun-09
9-Jun-09
10-Jun-09
11-Jun-09
12-Jun-09
15-Jun-09
16-Jun-09
17-Jun-09
18-Jun-09
19-Jun-09
22-Jun-09
23-Jun-09
24-Jun-09
25-Jun-09

Expiry
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09

88

Strike Price
640
640
640
640
640
640
640
640
640
640
640
640
640
640
640
640
640
640
640

Settle Price
37.85
43.1
36.4
33.7
34.45
58.95
54.1
41.05
50.25
61.4
45.5
32.6
39.95
36.25
21.1
11.4
21.15
19
0

OBSERVATIONS AND FINDINGS

JUNE PUT OPTION
BUYERS PAY OFF:
Those who have purchase put option at a strike price 640, the premium payable is 37.85.
On 17th spot market price enclosed at 636
Strike Price 640.00
Spot price 600.05
Amount
39.95
Premium Paid(-) 37.85
Profit
2.1*300=630
So, he got profit up to Rs 630
Because it is positive, IN THE MONEY contract, hence buyer gets profit, incase spot price
increases above strike price, buyer get loss in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if buyer is in profit and also seller has to get
total loss.
Spot Price 600.05
Strike Price 640.00
Amount
-39.95
Premium received (+) 37.85
Loss
-2.1*300=--630
Already Premium Received
So, he can get Loss up to Rs 630
Because it is Loss, OUT OF THE MONEY Contract, hence seller gets more Loss , incase Spot
price increases above strike price seller can get profit in premium.

89

PNB JUNE CALL OPTION(Strike Price=640):Instrument

OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK
OPTSTK

Symbol
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB

Option
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA

Date
1-Jun-09
2-Jun-09
3-Jun-09
4-Jun-09
5-Jun-09
8-Jun-09
9-Jun-09
10-Jun-09
11-Jun-09
12-Jun-09
15-Jun-09
16-Jun-09
17-Jun-09
18-Jun-09
19-Jun-09
22-Jun-09
23-Jun-09
24-Jun-09
25-Jun-09

Expiry
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09

90

Strike
640
Price
640
640
640
640
640
640
640
640
640
640
640
640
640
640
640
640
640
640

Settle Price
63
51
55.2
56.85
50.15
26.6
26.1
14
23.9
15.3
17.6
24.05
15.35
13.95
23.55
20.3
6.45
2.75
0

OBSERVATIONS AND FINDINGS

JUNE CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of PNB that is 300 those who buy for 640 paid 51 Premium Per
Share.
Taken Spot price on 9th june 09 is 615.1.Such as Call option is sold on 9th June
Spot price 615.1
Strike price
640.0
Amount
-24.9
Net Loss
-24.9*300=-7470
Buyer Loss = Rs 7470(Net Amount)
Because it is negative it is OUT OF THE MONEY contract, hence buyer will get more
Loss, incase spot price decreases buyer Loss also increases.

SELLERS PAY OFF:

It is OUT OF THE MONEY for the buyer, so it is IN THE MONEY for seller , hence his
Profit increases.
Strike price 640.00
Spot price 615.1
Amount

24.9

Profit 24.9*300=7470
Seller Profit = Rs 7470(Profit)
Because it is positive so it is IN THE MONEY, hence seller will get more profit, incase
spot price increases in above strike price, seller get loss in premium level.

91

800
700
600
500
400
300
200
100
0

Underlying Price
call Price

23-Jun-09

21-Jun-09

19-Jun-09

17-Jun-09

15-Jun-09

13-Jun-09

11-Jun-09

09-Jun-09

07-Jun-09

05-Jun-09

03-Jun-09

Put Price

01-Jun-09

Stock Price

PNB June Options(strike Price=640)

Date

PNB declines 6.7% On June 8th 09, PNB touched an intraday high of Rs 662 and an
intraday low of Rs 608.15. At 2:59 pm, the share was quoting at Rs 609.05, down Rs 43.65, or
6.69%. It was trading with volumes of 124,992 shares. On 6th June the share closed down 0.90%
or Rs 5.90 at Rs 652.70. so that put option started increasing and call option tend to decrease
from 6th June 09 onwards.
PNB was the top gainer at the Nifty on June 18th 09 so it touched an intraday high of Rs
639 and an intraday low of Rs 612. The share was quoting at Rs 638.35, up Rs 23.50, or 3.82%.
So that the share value increased on June 18th 09 hence call price also rise and put option prices
tend to decrease.
PNB Minting money on 15th June 09 so it touched an intraday high of Rs 617.90 and
an intraday low of Rs 583. At 2:22 p.m the share was quoting at Rs 613.50, up Rs 20.50, or
3.46%.
It was trading with volumes of 635,040 shares. On 11th June the share closed down 3.21% or Rs
19.65 at Rs 593.

92

PNB JUNE FUTURES:Instrument

Symbol

Date

Expiry

Open

High

Low

Close

LTP

FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK

PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB
PNB

1-Jun-09
2-Jun-09
3-Jun-09
4-Jun-09
5-Jun-09
8-Jun-09
9-Jun-09
10-Jun-09
11-Jun-09
12-Jun-09
15-Jun-09
16-Jun-09
17-Jun-09
18-Jun-09
19-Jun-09
22-Jun-09
23-Jun-09
24-Jun-09
25-Jun-09

25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09
25-Jun-09

660
650.95
632.6
630
659.95
651.4
595
623.6
634
613.3
589.2
602
632
608
624
650.95
633.55
627.1
630.35

663
653
638.8
657.95
664.8
652.1
624.75
638.75
636.85
619.4
616.25
633
643.5
635.75
647.45
659
647
631.85
643

641.15
609.85
618
625.15
649.35
595
588.5
621
602.55
590.05
582.6
602
603.1
608
621.4
643
619.1
621
626.6

646.6
625.65
632.05
655.3
654.15
605.8
613.2
633.5
612
593.6
610.1
630.25
607.95
616.85
643.65
646.6
626.75
625.35
631.75

650.7
629
630.7
653.5
653.35
595
618.8
634.85
610.1
594.4
614
627.85
606
619
646.4
643.5
622
626.25
631.75

93

Settle
Price
646.6
625.65
632.05
655.3
654.15
605.8
613.2
633.5
612
593.6
610.1
630.25
607.95
616.85
643.65
646.6
626.75
625.35
631.45

PNB(June Futures)
680
S
t
o
c
k

660
640
620
600

Underlying Price

580

P
560
r
i 540
c
e

Future Price

Date

Future Market
BUYER

SELLER

12/06/09(buying)

593.6

593.6

25/06/09(Closing Period)

631.45

631.45

Profit = 37.85
Profit 37.05*300=11355

Loss = 37.25
Loss 37.25*300=11355

Because buyer Future price will increase so, profit also increases. Seller Future price also
increases so he can get loss. Incase seller Future will decreases, he can get profit.
The closing Price of PNB at the end of contract period is 630.35 and this is considered as
settlement price.

94

HINDUSTAN UNILEVER

95

5.3 Hindustan Unilever:5.3.1 Introduction

Hindustan Unilever Limited (HUL) is India's largest fast moving consumer goods company, with
leadership in Home & Personal Care Products and Foods & Beverages. HUL's brands, spread across 20
distinct consumer categories, touch the lives of two out of three Indians. They endow the company with
a scale of combined volumes of about 4 million tonnes and sales of Rs.13,718 crores.
The mission that inspires HUL's over 15,000 employees is to "add vitality to life". With 35 Power Brands,
HUL meets everyday needs for nutrition, hygiene, and personal care with brands that help people feel
good, look good and get more out of life.
It is a mission HUL shares with its parent company, Unilever, which holds 52.10% of the equity. A
Fortune 500 transnational, Unilever sells Foods and Home and Personal Care brands in about 100
countries worldwide.

Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene, and
personal care with brands that help people feel good, look good and get more out of life.
Brands

Lux
Lifebuoy
Liril
Hamam

Breeze
Dove
Pears
Rexona

Surf Excel
Rin
Wheel
Sunlight

Fair & Lovely

Pond's
Vaseline
Aviance

Sunsilk Naturals
Clinic

Pepsodent
Closeup

96

Axe
Rexona

Lakme

Ayush

Brooke Bond
Lipton

Brooke Bond Bru

Kissan
Annapurna
Knorr

Kwality Wall's

97

98

Merging
company
Kothari General
Foods
Corporation Ltd.

Merged with

Appointed Effective Date of

date
date
allotment

Share
ratio

Value of
fraction
(Rs.)

Brooke Bond
India Ltd.

1-Jan-92

1-Jan-92 30-Jun-92 21:1

Tea Estates India Brooke Bond

Ltd.
India Ltd.

1-Jan-93

1-Jun-93

24-Aug93

10:12

35.25

Doom Dooma
India Ltd.

Brooke Bond
India Ltd.

1-Jan-93

1-Jun-93

24-Aug93

10:11

35.25

Kissan Products
Ltd.

Brooke Bond
India Ltd.

1-Apr-93

20-Jan94

22-Jan-94 1:100

Not
applicable

Lipton India Ltd. Brooke Bond

India Ltd.
[name changed to
1-Jul-93
Brooke Bond
Lipton India Ltd.
(BBLIL)]

9-Mar94

16-May94

10:9

48.99

The Tata Oil

Mills Company
Ltd.

Hindustan Lever
Ltd.

1-Apr-93

28-Dec94

5-Apr-95 15:2

38.86

BBLIL

Hindustan Lever
Ltd.

1-Jan-96

21-Mar- 16-May97
97

20:9

52.82

Pond's (India)
Ltd.

Hindustan Lever
Ltd.

1-Jan-98

15-Oct98

4:3

525.00

Industrial
Perfumes Ltd.

Hindustan Lever
Ltd.

1-Jan-99

9-Feb-00 23-Feb-00 5:2

Not
applicable

International
Bestfoods Ltd.

Hindustan Lever
Ltd.

1-Jun-01

26-Sep01

20-Oct-01

73.84

Aviance Limited

Hindustan Lever
Ltd.

1-Jun-01

25-Sep01

Not
Not
Not
Applicable Applicable Applicable

1-Apr-05

1-Dec-05 02-Dec-05 ^

Not
Applicable

1-Apr-05

1-Dec-05 02-Dec-05 ^^

Not

Tea Estates India

Ltd. (Formerly
Demerger from
known
Hindustan Lever
asThiashola Tea Limited
Company
Limited) (TEI)
Doom Dooma

Demerger from

99

3-Mar-99

3:2*

7.00

Tea Company
Hindustan Lever
Ltd (Formerly
Limited
known as
Daverashola Tea
Company
Limited) (DDT)

Applicable

Lever India
Exports Limited

Hindustan Lever
Ltd.

1-Apr-05

30-Dec05

Not
Not
Not
Applicable Applicable Applicable

Lipton India
Exports Limited

Hindustan Lever
Limited

1-Jan-05

30-Dec05

Not
Not
Not
Applicable Applicable Applicable

Merryweather
Food Products
Limited

Hindustan Lever
Limited

1-Jan-05

30-Dec05

Not
Not
Not
Applicable Applicable Applicable

TOC
Disinfectants
Limited

Hindustan Lever
Limited

1-Apr-05

30-Dec05

26-Apr-06 500:1 **

Not
Applicable

International
Hindustan Lever
Fisheries Limited Limited

1-Jan-05

30-Dec05

26-Apr-06 1:1***

Not
Applicable

Vashisti
Detergents
Limited

Hindustan Lever
Limited

1-Jul-05

28-Feb06

10-Apr-06 10:1****

28.00

Modern Food
Industries (India)
Limited &
Hindustan Lever
Modern Food and
Limited
Nutrition
Industries
Limited

1-Oct-06

30-Mar- Not
Not
Not
07
Applicable Applicable Applicable

Shamnagar
Estates Private
Limited,
Jamnagar
Properties Private
Limited and
Hindustan
Kwality Walls
Foods Private
Limited (now
known as
Daverashola
Estates Private
Limited)

1-Nov-06

29-Mar- Not
Not
Not
07
Applicable Applicable Applicable

Demerger of
certain Units
from Hindustan
Lever Limited

100

Notes : *Swap based on Rs. 10 share of International Bestfoods Ltd. for Re. 1 share of
Hindustan Lever.
** Swap based on Rs.5/- share of TOC Disinfectants Limited (TOC) for Re.1/- share of
Hindustan Lever Limited
*** Swap based on Rs.100/- share of International Fisheries Limited (IFL) for Re.1/- share of
Hindustan Lever Limited
**** Swap based on Rs.10/- share of Vashisti Detergents Limited (VDL) for Re.1/- share of
Hindustan Lever Limited
^ 49,50,000 Equity Shares of Rs.10/- each and 10,00,000 Preference Shares of Rs.100/- each
were allotted to HLL pursuant to the demerger by TEI
^^ 4,88,000 Equity Shares of Rs.100/- each and 10,00,000 Preference Shares of Rs.100/- each
were allotted to HLL pursuant to the demerger by DDT

101

5.3.2 HUL MAY MONTH ANALYSIS

Hindustan Unilever May Equity Table:-

Symbol
HINDUNILVR

Seri
es
EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

Date
4-May09
5-May09
6-May09
7-May09
8-May09
11-May09
12-May09
13-May09
14-May09
15-May09
18-May09
19-May09
20-May09
21-May09
22-May09
25-May09
26-May09
27-May09
28-May09
29-May09

Prev
Close
234.7
5
239.9

Open
Price
236

High
Price
242

Low
Price
233.1

Last
Price
239.6

Close
Price
239.9

Averag
e Price
237.38

Total Traded
Quantity
4896016

Turnover in
Lacs
11622.20462

240

241.5

235.5

237.2

238.94

2813418

6722.363085

238.3
5
234.6

239.9

240.8
5
238

232.2

233.5

238.3
5
234.6

234.99

5167053

12141.97328

230.3

5075534

11837.50389

230.7
5
235.2
5
227.6

233.15

5443176

12691.00179

226

226.2

228.22

7025750

16034.23965

227.8
5
227.2

221.8

225.2

230.6
5
233.0
5
227.1
5
225.1

233.23

230.6
5
233.0
5
227.1
5
225.1

229.3
5
230

223.99

8210288

18390.49832

221.1

220.8

223.58

3149690

7042.135618

220.8

222

218.1

225

220.91

7493434

16553.85609

224.8
5
224.3

226

225.6
5
227.4

224.5
5
239

221.9
5
224.8
5
224.3

224.83

2449088

5506.23301

239.6

247.92

51515

127.7145265

234.5

225.1

234.1
5
236.5

233.5

264.4

239.6

244.9
5
245

223.6
5
228

251

224

230

229.5

228.66

13669545

31256.89658

229.5

234.9

225

23212.54873

229.92

2715676

6243.855165

231

234.3

226.5
5
228.1

233.4
5
230.4

10140045

233.2

232.9
5
230.0
5
232.8

228.92

233.4
5
230.4

235.8
5
235

232

231.58

2391122

5537.462276

232

231

235.5

229.9

231.7

233.36

3418801

7978.185038

233.0
5
231

238.7

238.7

229.5

233.77

3475193

8123.976091

233.3

233.3

228.1

231.4
5
230

233.0
5
231

229.72

3314721

7614.612061

230.1
5
231

232

233.5

228.5

230.8

230.1
5
231

231.19

5375654

12428.16871

232

233.9

229.5
5

231.5

230.8

230.91

4633440

10699.28036

102

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and
Puts.
Open Price=236 On 4th May 09
Low Price=218 On 14th May 09
High Price=264 On 18th May 09
Close price=1230 On 29th May 09

In the above graph I calculate Breakeven point for HUL Stock.

Break Even Point(BEP) = (High Price + Low Price)/2
= (264+218)/2
= 241
Again I found margin of safety (MOS)
(1) Margin of safety (mos) = opening share value BEP
=236-241
103

=-5
So here margin of safety is negative value. So here investor gets more Loss and shorts. Here
investor can buy put options to get more profits. Investors should not go for call options at this
point
(2) Margin of safety (mos) =high share value BEP
=264-241
=23
So here margin of safety is Positive value. So here investor gets more profits and longs. So
at this point investor can sell their Call options to get more profis.
(3) Margin of safety (mos) =LOW share value BEP
=218-241
=-23
So here margin of safety is negative. so here investor gets more losses and more shorts.
Investor can sell their Put Option at this point to incur more profits.

104

HUL MAY MONTH CALL OPTION TABLE(Strike Price=230):Instrument

Symbol

Option

Date

Expiry

Strike Price

Close

Settle Price

Turnover in Lacs

OPTSTK

HINDUNILVR

CA

4-May-09

28-May-09

230

14.05

14.05

87.32

OPTSTK

HINDUNILVR

CA

5-May-09

28-May-09

230

14.5

14.5

19.62

OPTSTK

HINDUNILVR

CA

6-May-09

28-May-09

230

12.95

12.95

4.85

OPTSTK

HINDUNILVR

CA

7-May-09

28-May-09

230

9.3

9.3

95.84

OPTSTK

HINDUNILVR

CA

8-May-09

28-May-09

230

10

10

62.45

OPTSTK

HINDUNILVR

CA

11-May-09

28-May-09

230

6.8

6.8

218.24

OPTSTK

HINDUNILVR

CA

12-May-09

28-May-09

230

6.05

6.05

393.6

OPTSTK

HINDUNILVR

CA

13-May-09

28-May-09

230

4.85

4.85

315.39

OPTSTK

HINDUNILVR

CA

14-May-09

28-May-09

230

5.75

5.75

500.32

OPTSTK

HINDUNILVR

CA

15-May-09

28-May-09

230

5.3

5.3

289.54

OPTSTK

HINDUNILVR

CA

18-May-09

28-May-09

230

8.55

8.55

7.22

OPTSTK

HINDUNILVR

CA

19-May-09

28-May-09

230

6.95

6.95

428.93

OPTSTK

HINDUNILVR

CA

20-May-09

28-May-09

230

395.65

OPTSTK

HINDUNILVR

CA

21-May-09

28-May-09

230

6.15

6.15

355.92

OPTSTK

HINDUNILVR

CA

22-May-09

28-May-09

230

5.95

5.95

332.6

OPTSTK

HINDUNILVR

CA

25-May-09

28-May-09

230

5.85

5.85

188.92

OPTSTK

HINDUNILVR

CA

26-May-09

28-May-09

230

3.25

3.25

218.34

OPTSTK

HINDUNILVR

CA

27-May-09

28-May-09

230

2.55

2.55

230.15

OPTSTK

HINDUNILVR

CA

28-May-09

28-May-09

230

0.8

383.37

105

OBSERVATIONS AND FINDINGS

MAY CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of HUL that is 1000 those who buy for 230 paid 14.03 Premium Per
Share.
Spot price taken on 13th may 09 is 220.8, such as call option sold on 13th may 09.
Spot price 220.8
Strike price
230.00
Amount
-9.2
Net Loss
-9.2*1000=-9200
Buyer Loss = Rs 11500(Net Amount)
Because it is negative it is OUT OF THE MONEY contract, hence buyer will get more
Loss, incase spot price decreases buyer Loss also increases.

SELLERS PAY OFF:

It is OUT OF THE MONEY for the buyer, so it is IN THE MONEY for seller , hence his
Profit increases.
Strike price 220.8
Spot price 230.00
Amount

9.2

Profit 9.2*1000=9200
Seller Profit = Rs 9200(Profit)
Because it is positive so it is IN THE MONEY, hence seller will get more profit, incase
spot price increases in above strike price, seller get loss in premium level.

106

HUL MAY MONTH PUT OPTION TABLE(Strike Price=230):Instrument

Symbol

Option

Date

Expiry

Strike Price

Close

Settle Price

Open Int

4.9

Turnover
in Lacs
98.76

OPTSTK

HINDUNILVR

PA

4-May-09

28-May-09

230

4.9

OPTSTK

HINDUNILVR

PA

5-May-09

28-May-09

230

5.05

5.05

108.01

88000

OPTSTK

HINDUNILVR

PA

6-May-09

28-May-09

230

6.15

6.15

108.6

99000

OPTSTK

HINDUNILVR

PA

7-May-09

28-May-09

230

7.75

7.75

189.21

118000

OPTSTK

HINDUNILVR

PA

8-May-09

28-May-09

230

6.4

6.4

35.45

126000

OPTSTK

HINDUNILVR

PA

11-May-09

28-May-09

230

9.85

9.85

105.18

115000

OPTSTK

HINDUNILVR

PA

12-May-09

28-May-09

230

10.35

10.35

52.99

114000

OPTSTK

HINDUNILVR

PA

13-May-09

28-May-09

230

12.45

12.45

41

106000

OPTSTK

HINDUNILVR

PA

14-May-09

28-May-09

230

9.95

9.95

21.89

108000

OPTSTK

HINDUNILVR

PA

15-May-09

28-May-09

230

10.3

10.3

57.45

99000

OPTSTK

HINDUNILVR

PA

18-May-09

28-May-09

230

10.3

3.45

99000

OPTSTK

HINDUNILVR

PA

19-May-09

28-May-09

230

6.25

6.25

42.65

97000

OPTSTK

HINDUNILVR

PA

20-May-09

28-May-09

230

4.65

4.65

65.84

94000

OPTSTK

HINDUNILVR

PA

21-May-09

28-May-09

230

5.85

5.85

37.72

92000

OPTSTK

HINDUNILVR

PA

22-May-09

28-May-09

230

3.95

3.95

86.76

96000

OPTSTK

HINDUNILVR

PA

25-May-09

28-May-09

230

2.65

2.65

74.5

94000

OPTSTK

HINDUNILVR

PA

26-May-09

28-May-09

230

3.15

3.15

97.53

90000

OPTSTK

HINDUNILVR

PA

27-May-09

28-May-09

230

1.9

1.9

78.98

100000

OPTSTK

HINDUNILVR

PA

28-May-09

28-May-09

230

0.1

115.41

110000

107

60000

OBSERVATIONS AND FINDINGS

MAY PUT OPTION
BUYERS PAY OFF:
Those who have purchase put option at a strike price 230, the premium payable is 8.9.
On 12th may the spot market price enclosed at .
Strike Price
Spot price
Amount
Premium Paid(-)
Profit

230
215.65
-14.35
8.9
5.45*1000=5450

So, he got profit up to Rs 5450

Because it is positive, IN THE MONEY contract, hence buyer gets profit, incase spot price
increases above strike price, buyer get loss in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if buyer is in profit and also seller has to get
total loss.
Spot Price 230
Strike Price 215.65
Amount
-14.35
Premium received (+) 8.9
Loss
-5.45*1000=-5450
Already Premium Received
So, he can get Loss up to Rs 5450
Because it is Loss, OUT OF THE MONEY Contract, hence seller gets more Loss , incase Spot
price increases above strike price seller can get profit in premium.

108

Stock Price

HUL(May Options) Strike Price=230

275
250
225
200
175
150
125
100
75
50
25
0

Underlying value
Call Price
Put Price

Date

On 7th may 09 HUL lost market shares to rivals in March ended quarter. so that share value
decreased slightly.
On 11th may 09 HUL has announced its numbers for the quarter ended January-March 2009.
Its net profit increased 3.7% to Rs 394.99 crore from Rs 380.9 crore. Its operating profit margin
(OPM) went up 302 bps at 13.77% versus 10.75% and adjusted profit after tax (APAT) rose
32.67% to Rs 502.08 crore versus Rs 378.43 crore. The company's net sales advanced 5.1% to
Rs 3,988.33 crore as against Rs 3,793.9 crore. HUL has reported exceptional loss of Rs 107.09
crore versus gain of Rs 2.5 crore.Its Exports Sales down 44.7% at Rs 220.47 crore versus Rs
398.93 crore
EBIT margins up 208bps at Rs 6.5% versus 4.4%

109

Instrum
ent

Symbol

FUTSTK

HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR

4-May09
5-May09
6-May09
7-May09
8-May09
11-May09
12-May09
13-May09
14-May09
15-May09
18-May09
19-May09
20-May09
21-May09
22-May09

FUTSTK

HINDUNIL
VR

FUTSTK

FUTSTK

FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK
FUTSTK

FUTSTK

Date

Expiry

Op
en

High

28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09
28-May09

237
.8
238

230
.65
234

242.
5
241.
55
240.
35
237.
85
234.
4
236

228

228

226

227

220

226

226
.95
238

227

25-May09

HINDUNIL
VR
HINDUNIL
VR
HINDUNIL
VR

Low

Clos
e

LTP

240

239.
8
237.
8
234.
8
230.
6
232.
95
226.
15
226.
2
221.
5
225.
9
225.
5
240

Settl
e
Price

No.
of
contr
acts
4154

Open Int
Turnov
er in
lacs
9921.02

Change
in OI

9431000

-204000

238.
4
235.
65
230.
8
233.
1
226.
7
226

2509

6000.31

9095000

-336000

3286

7757.95

9680000

585000

3907

9129.2

9177000

-503000

3327

7762.84

9268000

91000

3303

7542.72

9478000

210000

2820

6337.17

10006000

528000

3590

8030.4

10659000

653000

3666

8142.34

10473000

-186000

1953

4406.49

10767000

294000

66

157.03

10733000

-34000

7803

556000

10733000

-556000

2691

17966.6
2
10003.0
6
6197.84

11289000

229.
8
232.
2

221.
9
225.
5
225.
25
238.
3
230.
7
233.
45
230.
3
231.
85

9957000

-776000

3421

7912.2

8637000

242
.2
228
.95
234

241.
5
243.
9
235.
5
234

230
.9

233.
9

234.
6
236.
2
233.
25
229.
05
230.
65
226.
1
222.
75
221.
05
218.
75
224.
6
230.
05
225.
5
226.
1
227.
1
228.
1

28-May09

230
.2

234.
85

229.
15

232.
8

232.
15

232.
8

4485

10442.5

6059000

26-May09

28-May09

232
.1

235.
4

228.
1

230.
2

230

230.
2

3779

8793.4

4747000

27-May09
28-May09

28-May09
28-May09

231
.5
230
.85

233

227.
6
228.
35

230.
6
231.
1

230.
5
231.
1

230.
6
231

6303

14501.8

3975000

132000
0
257800
0
131200
0
-772000

2767

6401.78

3463000

-512000

237
.5
236

233.
55

238.
4
235.
65
230.
8
233.
1
226.
7
226
221.
9
225.
5
225.
25
238.
3
230.
7
233.
45
230.
3
231.
85

110

229.
5
233

240

4357

HUL(May Futures)
250
245
240
235
230
225
220
215
P 210
r 205
i
c
e

S
t
o
c
k

Underlying Price
Future Price

Date

Future Market
BUYER

SELLER

12/05/09(buying)

226

226

28/05/09(Closing Period)

221

221

Profit = 5
Profit 5*1000=5000

Loss = 5
Loss 5*1000=5000

Because buyer Future price will increase so, profit also increases. Seller Future price also
increases so, he can get loss. Incase seller Future will decreases, he can get profit.
The closing Price of HUL at the end of contract period is 221 and this is considered as
settlement price.

111

HUL JUNE MONTH ANALYSIS

Symbol
HINDUNILVR

Seri
es
EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

HINDUNILVR

EQ

Date
1-Jun09
2-Jun09
3-Jun09
4-Jun09
5-Jun09
8-Jun09
9-Jun09
10-Jun09
11-Jun09
12-Jun09
15-Jun09
16-Jun09
17-Jun09
18-Jun09
19-Jun09
22-Jun09
23-Jun09
24-Jun09
25-Jun09
26-Jun09
29-Jun09
30-Jun09

Prev
Close
230.8

235

High
Price
233.4
5
235.1
5
241

236.5

251

Low
Price
228.5
5
232.5
5
233.4
5
236.5

250.2
5
252

257.7

246.2

252

252

252.91

4499129

11378.87204

253.5

7099.03176

259

253.55

2932775

7436.116014

257

269.9

263.99

6277803

16573.06262

264

264.9

258.5

260.2

260.92

3587460

9360.251865

257

258.5

252

255.52

4793781

12249.10305

257.9

262.8
5
265.7
5
267

252.1
5
257.7

258.77

4900720

12681.51215

260.06

2197923

5716.010496

261.6

261.1

2993196

7815.193043

261.6

261.2
5
260.5

265.5

257.6

256.0
5
262.7
5
265.3
5
261.9
5
260.1

252.2
5
256.7
5
264.3
5
259.9
5
255.7
5
259.1
5
268.4

2847980

252

252.1
5
257

249.27

252.2
5
256.7
5
264.3
5
259.9
5
255.7
5
259.1
5
268.4

245.3
5
248.2
5
256

261.07

2837816

7408.632434

263

260.6

260.47

1906831

4966.735851

260.5
5
259.2
5
261

263.5

259.0
5
252.4

260.03

5785095

15042.96081

262

255.7

260

259.54

3885451

10084.41348

264.3
5
265.4

258

261.39

2005337

5241.832353

257

261.9
5
257.7

259.46

6800388

17644.56393

268

257.6

266.6

262.47

3310926

8690.258465

269.7

262.2
5
264.6
5

268

259.7
5
260.7
5
259.2
5
260.0
5
263.5
9
258.9
5
266.0
5
266.6

266.98

2878839

7685.9485

269

267.5

269.18

4224981

11372.90613

232.6
5
233.7
5
239.7
249.5
252

259.7
5
260.7
5
259.2
5
260.0
5
263.5
9
258.9
5
266.0
5
266.6

Open
Price
228.5
5
233.1

258
267

262.0
5
259.6
5
266
265

271.4
5

256.4

112

Last
Price
232.2

Averag
e Price
231.93

Total Traded
Quantity
2701891

Turnover in Lacs

233.51

3417724

7980.572611

238

Close
Price
232.6
5
233.7
5
239.7

236.7

4986667

11803.6118

249.3

249.5

247.75

4636344

11486.59379

233.5

263.6

259.3

6266.587392

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and
Puts.
Open Price=228 On 1st June 09
Low Price=228 On 2nd june 09
High Price=271 On 30th june 09
Close price=267 On 30th june 09

In the above graph I calculate Breakeven point for GMRINFRA Stock.

Break Even Point(BEP) = (High Price + Low Price)/2
= (228+271)/2
= 249
Again I found margin of safety (MOS)
(1) Margin of safety (mos) = opening share value BEP
=228-249
=-13
113

So here margin of safety is negative value. So here investor gets more Loss and longs. Here
investor can buy put options to get more profits. Investors should not go for call options at this
point
(2) Margin of safety (mos) =high share value BEP
=271-249
=22
So here margin of safety is Positive value. So here investor gets more profits and longs. So
at this point investor can sell their Call options to get more profits.
(3) Margin of safety (mos) =LOW share value BEP
=228-249
=-13
So here margin of safety is negative. so here investor gets more losses and more shorts.
Investor can sell their Put Option at this point to incur more profits.

114

HUL JUNE MONTH CALL TABLE(Strike Price=250):Instrument

Symbol

Option

Date

Expiry

Strike Price

Close

Settle Price

Turnover in Lacs

OPTSTK

HINDUNILVR

CA

1-Jun-09

25-Jun-09

250

2.9

2.9

192.03

OPTSTK

HINDUNILVR

CA

2-Jun-09

25-Jun-09

250

131.49

OPTSTK

HINDUNILVR

CA

3-Jun-09

25-Jun-09

250

4.1

4.1

768.74

OPTSTK

HINDUNILVR

CA

4-Jun-09

25-Jun-09

250

7.65

7.65

1426.62

OPTSTK

HINDUNILVR

CA

5-Jun-09

25-Jun-09

250

7.7

7.7

1060.57

OPTSTK

HINDUNILVR

CA

8-Jun-09

25-Jun-09

250

7.85

7.85

510.86

OPTSTK

HINDUNILVR

CA

9-Jun-09

25-Jun-09

250

9.7

9.7

866.42

OPTSTK

HINDUNILVR

CA

10-Jun-09

25-Jun-09

250

15.35

15.35

513.23

OPTSTK

HINDUNILVR

CA

11-Jun-09

25-Jun-09

250

11.25

11.25

151.99

OPTSTK

HINDUNILVR

CA

12-Jun-09

25-Jun-09

250

10.25

10.25

140.24

OPTSTK

HINDUNILVR

CA

15-Jun-09

25-Jun-09

250

13.9

13.9

125.75

OPTSTK

HINDUNILVR

CA

16-Jun-09

25-Jun-09

250

15.85

15.85

39.6

OPTSTK

HINDUNILVR

CA

17-Jun-09

25-Jun-09

250

13.45

13.45

55.23

OPTSTK

HINDUNILVR

CA

18-Jun-09

25-Jun-09

250

11.3

11.3

52.88

OPTSTK

HINDUNILVR

CA

19-Jun-09

25-Jun-09

250

14.2

14.2

26.31

OPTSTK

HINDUNILVR

CA

22-Jun-09

25-Jun-09

250

10.4

10.4

31.28

OPTSTK

HINDUNILVR

CA

23-Jun-09

25-Jun-09

250

10.4

10.4

33.95

OPTSTK

HINDUNILVR

CA

24-Jun-09

25-Jun-09

250

13.5

13.5

15.82

OPTSTK

HINDUNILVR

CA

25-Jun-09

25-Jun-09

250

10.95

20.78

115

OBSERVATIONS AND FINDINGS

JUNE CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of HUL that is 1000 those who buy for 250 paid 2.9 Premium Per
Share.
Settlement Price is 263.5
Spot price 263.5
Strike price
250.00
Amount
13.5
Premium Paid (-)
2.9
Net Profit
10.6*1000=10600
Buyer Profit = Rs 10600(Net Amount)
Because it is positive it is IN THE MONEY contract, hence buyer will get more profit,
incase spot price increase buyer profit also increases.

SELLERS PAY OFF:

It is in the money for the buyer, so it is n out of the money for seller , hence his loss is
also increases.
Strike price 263.5
Spot price 250.00
Amount
Premium Received
Loss

-13.5
2.9
-10.6*1000=-10600

Seller loss = Rs -10600(Loss)

Because it is negative it is out of the money, hence seller will get more loss, incase spot
price decreases in below strike price, seller get profit in premium level.

116

HUL JUNE MONTH PUT OPTION TABLE:Instrument

Symbol

Option

Date

Expiry

Strike Price

Close

Settle Price

Turnover in Lacs

OPTSTK

HINDUNILVR

PA

1-Jun-09

25-Jun-09

250

21.35

20.25

OPTSTK

HINDUNILVR

PA

2-Jun-09

25-Jun-09

250

21.35

19.1

OPTSTK

HINDUNILVR

PA

3-Jun-09

25-Jun-09

250

21.35

14.95

OPTSTK

HINDUNILVR

PA

4-Jun-09

25-Jun-09

250

10.85

10.85

28.73

OPTSTK

HINDUNILVR

PA

5-Jun-09

25-Jun-09

250

9.2

9.2

114

OPTSTK

HINDUNILVR

PA

8-Jun-09

25-Jun-09

250

57.24

OPTSTK

HINDUNILVR

PA

9-Jun-09

25-Jun-09

250

6.15

6.15

380.16

OPTSTK

HINDUNILVR

PA

10-Jun-09

25-Jun-09

250

3.85

3.85

449.25

OPTSTK

HINDUNILVR

PA

11-Jun-09

25-Jun-09

250

249.56

OPTSTK

HINDUNILVR

PA

12-Jun-09

25-Jun-09

250

4.55

4.55

135.03

OPTSTK

HINDUNILVR

PA

15-Jun-09

25-Jun-09

250

2.85

2.85

220.52

OPTSTK

HINDUNILVR

PA

16-Jun-09

25-Jun-09

250

1.55

1.55

153.75

OPTSTK

HINDUNILVR

PA

17-Jun-09

25-Jun-09

250

1.85

1.85

125.93

OPTSTK

HINDUNILVR

PA

18-Jun-09

25-Jun-09

250

1.55

1.55

125.77

OPTSTK

HINDUNILVR

PA

19-Jun-09

25-Jun-09

250

160.81

OPTSTK

HINDUNILVR

PA

22-Jun-09

25-Jun-09

250

0.85

0.85

60.18

OPTSTK

HINDUNILVR

PA

23-Jun-09

25-Jun-09

250

0.55

0.55

77.79

OPTSTK

HINDUNILVR

PA

24-Jun-09

25-Jun-09

250

0.15

0.15

22.52

OPTSTK

HINDUNILVR

PA

25-Jun-09

25-Jun-09

250

0.05

20.01

117

OBSERVATIONS AND FINDINGS

JUNE PUT OPTION

BUYERS PAY OFF:

Those who have purchase put option at a strike price 250, the premium payable is 21.1.
On 17th june 09 taken as spot market price enclosed at 268.4
Strike Price 250
Spot price 268.4
Net Pay Off -18.4*1000=-18400
Already Premium paid is 20.25
So, he get loss up to Rs 18400
Because it is negative, out of the money contract, hence buyer gets more loss, incase spot price
decrease in below strike price, buyer get profit in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if he is in profit and also seller has to get
total profit.
Spot Price 268.5
Strike Price 250.0
Net Pay off
18.4*1000=18400
Already Premium Received 20.25
So, he can get profit up to Rs 18400
Because it is positive, in the money Contract, hence seller gets more profit, incase Spot price
decrease in below strike price seller can get loss in premium.

118

Stock Price

HUL(June Options)Strike Price=250

300
275
250
225
200
175
150
125
100
75
50
25
0

Underlying Price
Call Price
Put Price

Date

,
HUL was among major gainers on the Sensex on 4th june 09. It was trading with volumes
of 478,620 shares. So the share value increased drastically on 4th june 09. Hindustan Unilever
has added 3.7 lakh shares in open interest. Rollovers are strong into this month so positive
traction seen in HUL in June month.
HUL plans to sell 49% stake in BPO arm by 2010 reported by ET on june 9th 09.Tthere is
decrease in share value due to this news.
HUL is up nearly Rs 10 with a build up of nearly 13 lakh shares in OI which is around 10% in
a single trading session On 10th june 09. Which lifted up the share value.

119

HUL JUNE MONTH FUTURES TABLE:Instru

ment

Symbol

FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK
FUTS
TK

HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR
HINDUNI
LVR

Date

1-Jun09
2-Jun09
3-Jun09
4-Jun09
5-Jun09
8-Jun09
9-Jun09
10-Jun09
11-Jun09
12-Jun09
15-Jun09
16-Jun09
17-Jun09
18-Jun09
19-Jun09
22-Jun09
23-Jun09
24-Jun09
25-Jun09

Expiry

25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09
25Jun-09

Ope
n

Hig
h

Low

228.
5
230

230
.45
231
.3
237
.45
247
.45
255

231.
4
236.
25
245.
3
248.
2
246.
55
254
261.
1
257.
2
257.
5
260
264
261.
2
260.
9
261.
15
259.
9
262.
7
262.
9

249
.65
254
.2
266
.65
261
.95
257
.5
262
.9
266
.35
264
265
.8
263
.8
263
.4
262
.3
264
.1
264

Clos
e

LTP

227

230

230

229.
1
230.
5
235.
5
242.
5
242.
55
246.
3
254

230.
3
236.
15
246.
35
248.
45
248.
65
252.
95
261.
5
256.
65
255.
7
260.
45
264

230.
2
230.
05
235

No.
of
cont
racts
2560

230.3

255
252.
25
252.
5
257.
8
259.
35
258.
4
259.
35
257.
65
255.
55
258.
25
258.
1

261.
35
260.
6
262.
05
259.
65
260
263.
4
258.
9

120

Settle
Price

Open Int

Change in
OI

5857.96

9537000

102000

2196

5051.82

9463000

-74000

236.15

4720

11042.89

9505000

42000

246.
25
249.
25
248.
7
252.
8
261.
25
257.
2
256.
5
262.
15
264

246.35

5599

13653.05

9016000

-489000

248.45

4840

12053.52

8533000

-483000

248.65

2659

6544.39

8801000

268000

252.95

2624

6570.09

8955000

154000

261.5

5705

14884.37

9495000

540000

256.65

2573

6637.55

8949000

-546000

255.7

3087

7878.33

8466000

-483000

260.45

2519

6500.22

8729000

263000

264

2574

6717.66

8840000

111000

261.
05
261.
15
261.
8
259

261.35

5023

13111.94

8348000

-492000

260.6

5677

14897.88

7856000

-492000

262.05

3380

8830.21

7220000

-636000

259.65

4174

10881.56

5564000

-1656000

259.
95
263.
2
258.
9

260

3718

9652.07

5194000

-370000

263.4

2352

6145.22

4824000

-370000

258.95

3328

8646.9

4046000

-778000

Turnover
in lacs

HUL(June Futures)
270

Stock Price

260
250
240
230

Underlying Price

220

Future Price

210

Date

Future Market
BUYER

SELLER

12/06/09(buying)

255.7

255.7

29/06/09(Closing Period)

258.95

258.95

Profit = 3.25
Profit 3.25*1000=3250

Loss =3.25
Loss 3.25*1000=3250

Because buyer Future price will increase so, profit also increases. Seller Future price also
increases so he can get loss. Incase seller Future will decreases, he can get profit.
The closing Price of HUL at the end of contract period is 258.95 and this is considered as
settlement price.

121