Documente Academic
Documente Profesional
Documente Cultură
TEAM MEMBERS:
1.APEKSHA JAIN
2.SNEHA AGARKAR
3.SAUMITA PITRE
4.SACHIN CHAVAN
5.JASMIN SHAH
1
Meaning/Definition of Derivative
Derivative is a product/ financial instrument whose
value is derived from an underlying asset.
International Monitory Fund (IMF), defines
derivatives as, “Derivatives are financial
instrument,
that are linked to a specific financial instrument or
indicator or commodity and through which
specific
financial risk can be traded in financial markets in
their own right.’’
2
Reasons for Development
3
Participants in the market
4
Advantages of derivative market
5
Advantages of derivative market
6
Types of Derivatives
7
Types of Derivatives
8
Types of Derivatives
9
Emergence/History of Derivative Market
Liberalisation in the economy.
Demutualisation and corporatisation.
Integration of financial market
Improvement Information technology
Advancement in communication system
Reduced cost of transaction
10
Regulatory framework
11
L.C. Gupta Committee Recommendations
15
Distinguish between Forwards & Futures
Forward contract Futures contract
Counter party risk always exist No counter party risk exist, as the
contract is made with Clearing
Corporation.
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Types of Futures
17
Future Terminology
Spot price
Future Price
Contract cycle
Expiry dates
Contract size
Initial Margin
Marking to Market
Maintenance Margin
18
Pricing of Stock Futures
19
Comparison Between Cash Market &
F&O Market
Particulars Cash Market F&O Market
21
Accounting For Futures
2. Accounting at the time of daily settlement :
Payments made or received on account of daily
settlement is credited/debited to:
“Mark-to-market margin - Futures A/c”
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Accounting For Futures
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Accounting For Futures
24
Options
Fundamentally different from forward and futures
Gives the holder of the option the right but not an
obligation
Purchase of an option requires an up-front payment
Basically there are two types of option. They are Call
Option & Put Option
25
Option Terminology
Index options
Stock options
Buyer of an option
Writer of an option
Call option
Put option
Option price/premium
Expiration date
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Option Terminology
Strike price
American options
European options
In-the-money option
At-the-money option
Out-of-the-money option
Intrinsic value of an option
27
Pricing Options
28
Black & Scholes
29
Payoff for Investor Who Went Long
Nifty at 2220
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Payoff for Investor Who Went Short
Nifty at 2220
31
Payoff For Buyer Of Call Option
32
Payoff For Writer Of Call Option
33
Payoff For Buyer Of Put Option
34
Payoff For Writer Of Put Option
35
Payoff For A Bull Spread Created
Using Call Options
36
Payoff For A Bear Spread Created
Using Call Options
37
Accounting for options
38
Accounting for options
39
Accounting for options
40
Accounting for options
42
Taxation
43
THANK YOU
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