Future and options in indian stock market

The feedback you provide will help us show you more relevant content in the future. Prasad Bhattacharya Harminder Singh. Earlier studies of expiration day effects have found large volume effects, abnormal return volatility, and price effects during the last hour of trading on expiration days when the settlement is based on the closing price. Varma Sobhesh Kumar Agarwalla. Related Articles.

In case of grievances for Commodity Broking write to commoditygrievances motilaloswal. The author found no significant rise in the volatility of the underlying stocks as an effect of the expiration of futures and options on the Indian stock market between November and May The emergence of the market for derivative instruments can be traced back to the eagerness of risk avoiding economic agents to protect themselves against worries arising out of fluctuations in asset prices. Many researchers have investigated this important contract feature and its impact on the markets. The typical effects of futures expirations include the impact on the trading volume of the underlying asset, abnormally high volatility of the returns on expiration day, and price reversal after expiration.

We also find that i the introduction of futures trading leads to a decrease in spot volatility, ii volume decreases after the introduction of option contracts and, iii there are signifcant expiration day effects on both the value of shares traded and volatility series. It is examined whether there are significant differences in stock market behavior among the three groups. As in your example the value of trader is Rs 3,81, Stoll Robert E. The study has further found that days to expiry do not play significant role in the price discovery mechanism of Nifty futures contracts. For example: Options contracts on the stock of reliance are directly influenced by the price of Reliance stock.

Some more links:
-> top 10 stocks to buy
Options are based on the value of an underlying security such as a stock. Compare Share Broker in India. Rich investors and retail speculators categorised as—. Price reversals can occur if the expiration day effect results in a significant divergence between the trend in returns and the actual returns observed on the expiration days, thereby necessitating reversal to the trend on the day after the expiration of the derivatives contracts. The option binds a legal agreement between the parties giving a right to the buyer to buy the stock at the current price during the liquid life of the contract. Dealer-traded options don 't necessarily follow this. Futures Contract: Futures Contract means you agree to buy or sell the underlying security at a 'future' date.
-> what is the cheapest way for you to buy a stock?
The study shows that the mean and variance of the price of an arithmetic average futures contract are functions of its reference dates and that it can be flexibly designed to meet diverse hedging needs of investors. What is pair trading? To buy an option, you only deposit a premium," says Shomesh Kumar, head derivatives , Karvy Stock Broking. Using daily data of 42 sample stocks of high market capitalization, this study has found positive abnormal return and also abnormal volume on days prior to the expiration day. We use cookies to make interactions with our website easy and meaningful, to better understand the use of our services, and to tailor advertising. Do I have to pay mark-to-market margin? Share this Comment: Post to Twitter.
-> gold live price
These effects can be largely ascribed to arbitrage activities and the restriction on short sales in the Indian cash market. Click here to Enlarge Options can also be traded directly on the over-the-counter OTC exchange, but this is seen as risky. What are the various advantages of it? For the purpose, the study uses tick-by-tick data. We present a set of models relevant for predicting various aspects of intra-day trading volume for equities and showcase them as an ensemble that projects volume in unison.
-> Picture of crude oil refinery
Yigit Atilgan K. Two-Scaled Realised Volatility is used as the estimate of volatility. Futures and options are basically derivative instruments. The examples given has cleared all doubts. Further, multiple-regression analysis is set out to investigate the potential factors accounting for the market anomalies of expiration-day effects.
-> best online stock company
Kapil Gupta Balwinder Singh. Futures and options can give high profits and also high losses though options are not so risky regarding losses. Your Money. An option gives the buyer the right, but not the obligation, to buy or sell an asset at a specific price at any time during the life of the contract. Few things you should know about futures and options trading.
->Sitemap



Future and options in indian stock market:

Rating: 88 / 100
Overall: 70 Rates