EXECUTIVE SUMMARY
One of the interesting developments in financial markets over the last 15 to 20 years has been the growing popularity of derivatives or contingent claims. In many situations, both hedgers and speculators find it more attractive to trade a derivative on an asset than to trade the asset itself. Some derivatives are traded on exchanges. Others are made available to corporate clients by financial institutions or added to new issues of securities by underwriters.
In this report we have included history of Derivatives. Than we have included Derivatives Market in India. Than after we have included stock market Derivatives.
In this report we have taken a first look at forward, futures and options contracts. A forward or futures contract involves an obligation to buy or sell an asset at a certain time in the future for a certain price. There are two types of options: calls and puts. A call option gives the holder the right to buy an asset by a certain date for a certain price. In India the derivatives market has grown very rapidly. There are mainly three types of traders: hedgers, speculators and arbitrageurs.
In the next section, we have tried to determine the study of Nifty derivatives for the short term period using the two important indicators namely Open Interest & Put/Call Ratio. In which Put/Call Ratio analysis proves to be more effective indicators. Moreover in the analysis of Put/Call Ratio, Combination of Open Interest & Volume gives more accurate results.
In the last section, we have determined different trading strategies for different market views i.e. Bullish, Bearish, Range bound & Volatile. On the basis of investors’ perceptions they can use suited strategies which will minimize the loss. There are also some arbitrage strategies prevailing in the market like reversal, conversion etc. which give fix amount of profit irrespective of market movements but it is not readily available in the market but one has to grab such Opportunities.
Objectives
To determine the short term trend of nifty future using the important derivatives market indicators like Open interest and Put Call ratio.
To determine the derivatives trading strategy on the basis of different market outlooks which will minimize the risk exposure and at the same times will maximize the profits.
Scope of study
We have done the study of nifty futures only.
We have studied the short term trend of nifty futures for the month of Feb, 2010 only.
We have used two important indicators Open Interest and Put-Call Ratio only to determine the trend of Nifty.
Data collection sources
Primary –No
Secondary
• Various stock market web sites
• Magazines
• Capitaline Neo software
• Odin diet Software
Beneficiaries of study
• Derivative traders
• Hedge funds
• Institutional investors
• Arbitragers
• Hedger
• Speculators
• Jobbers
• Investors
• Student
• Share broker
• Broking houses
Download Full Project Report
One of the interesting developments in financial markets over the last 15 to 20 years has been the growing popularity of derivatives or contingent claims. In many situations, both hedgers and speculators find it more attractive to trade a derivative on an asset than to trade the asset itself. Some derivatives are traded on exchanges. Others are made available to corporate clients by financial institutions or added to new issues of securities by underwriters.
In this report we have included history of Derivatives. Than we have included Derivatives Market in India. Than after we have included stock market Derivatives.
In this report we have taken a first look at forward, futures and options contracts. A forward or futures contract involves an obligation to buy or sell an asset at a certain time in the future for a certain price. There are two types of options: calls and puts. A call option gives the holder the right to buy an asset by a certain date for a certain price. In India the derivatives market has grown very rapidly. There are mainly three types of traders: hedgers, speculators and arbitrageurs.
In the next section, we have tried to determine the study of Nifty derivatives for the short term period using the two important indicators namely Open Interest & Put/Call Ratio. In which Put/Call Ratio analysis proves to be more effective indicators. Moreover in the analysis of Put/Call Ratio, Combination of Open Interest & Volume gives more accurate results.
In the last section, we have determined different trading strategies for different market views i.e. Bullish, Bearish, Range bound & Volatile. On the basis of investors’ perceptions they can use suited strategies which will minimize the loss. There are also some arbitrage strategies prevailing in the market like reversal, conversion etc. which give fix amount of profit irrespective of market movements but it is not readily available in the market but one has to grab such Opportunities.
Objectives
To determine the short term trend of nifty future using the important derivatives market indicators like Open interest and Put Call ratio.
To determine the derivatives trading strategy on the basis of different market outlooks which will minimize the risk exposure and at the same times will maximize the profits.
Scope of study
We have done the study of nifty futures only.
We have studied the short term trend of nifty futures for the month of Feb, 2010 only.
We have used two important indicators Open Interest and Put-Call Ratio only to determine the trend of Nifty.
Data collection sources
Primary –No
Secondary
• Various stock market web sites
• Magazines
• Capitaline Neo software
• Odin diet Software
Beneficiaries of study
• Derivative traders
• Hedge funds
• Institutional investors
• Arbitragers
• Hedger
• Speculators
• Jobbers
• Investors
• Student
• Share broker
• Broking houses
Download Full Project Report
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