Share Market Learn With Earn India: Option or derivative; portfolio

Share Market Learn With Earn India

Date. 04 August 2020

Today’s Market

MARKET SCRIP	OPEN	HIGH	LOW	CLOSE	52 WEEK HIGH	52 LOW
NSE
NIFTY 50	10946	11112	10908	11095	12430	7511
NIFTY FUTURE	10940	11114	10912	11110	12419	7526
BANK NIFTY	21248	21576	21057	21490	32613	16116
BANK NIFTY FUTURE	21299	21633	21106	21552	32773	16020
CURRENCY USD-INR	75.36	75.39	75.15	75.29	77.01	68.663
COMMODITY-GOLD	54223	54318	53708	53997	49328	332701
COMMODITY-SILVER	65596	68833	65182	65748	53181	33619
COMMODITY-CRUDE	3060	3127	3016	3122	4671	804

BSE
SENSEX	37092	37745	36987	37687	42273	25638
BANKEX	24123	24833	23916	24388	37193	18430

Market Prediction (Speculation) Factor’s

MARKET SCRIP	RESULT
VIX	23.81
PCR	0.87
PE	21
DII	-665
FII	703
SGX NIFTY	11079
DOW JONES	26781

Market Analysis News’s/ Business Current Affair’s

L&T technology services(LTTS) expands collaboration with Microsoft corporation and launched its latest and enhanced version of the state of the art i-BEMSTM solution on Microsoft azure to transform buildings into future ready smart campuses.

Steel strips wheel ltd(SSWL) bagged firm export orders for over USD1.2Mn, 16000 wheels for US caravan trailer market to be executed in the month of oct from its Chennai plant.

Future lifestyle fashions (FLF) Q4FY2020 performance was affected by lockdown.

Benchmark indices were trading higher on aug 4, led by banks and index heavyweights RIL and HDFC bank.

RBI has approved the name of sashidhar jagdishan for the post of CEO of HDFC bank

Jindal steel & power (JSPL) sales up 29% yoy during july 2020

Jubliant life sciences launches remdesivir in india for treatment of COVID 19

Lupin received tentative USFDA not for empagliflozin tablets

Sunpharma industries launches fluguard (favipiravir 200mg) at price of Rs. 35/tablet for treatment of mild to moderates cases of COVID 19 in india.

Godrej consumer product Q1 net profit slips by 3.1% yoy

Hikal Q1 net profit drops by 40.5% yoy

Dixon technologies Q1 net profit fell by 93.2% yoy to Rs.1.6 cr vs Rs.23.6 cr

Neuland laboraratoriess net profit at Rs. 15.2 Cr. Vs Rs. 5.7 Cr.

Eris lifesciences Q1 net profit surges by 6% yoy

Varun beverages Q2 net profit falls by 64.7% yoy

Vinati organics Q1 revenue was lower by 21.7% yoy

Exide indu. Ltd delivered better than expected results in a tough environment.

Relaxo footwears ltd posted good numbers in Q1.

Learning Point/ Educational Study Point

A stock option gives an investor the right, but not the obligation, to buy or sell a stock at an agreed upon price and date. There are two types of options: puts, which is a bet that a stock will fall, or calls, which is a bet that a stock will rise.

There are two different styles of options: American and European. American options can be exercised at any time between the purchase and expiration date. European options, which are less common, can only be exercised on the expiration date.

Strike Price-

The strike price determines whether an option should be exercised. It is the price that a trader expects the stock to be above or below by the expiration date.

Contracts-

Contracts represent the number of options a trader may be looking to buy. One contract is equal to 100 shares of the underlying stock.

Premium-

The premium is determined by taking the price of the call and multiplying it by the number of contracts bought, then multiplying it by 100.

Spot price- stock or indices current market price.

CE- Call European

PE- Put European

ITM-In The Money

ATM-At The Money

OTM-Out The Money

Open interest is the total number of outstanding contracts that are held by market participants at the end of each day. Open interest measures the total level of activity into the futures market. ... Increasing open interest means that new money is flowing into the marketplace.

Implied volatility is the market's forecast of a likely movement in a security's price. Implied volatility is often used to price options contracts: High implied volatility results in options with higher premiums and vice versa.

The interest rate that moves markets is the federal funds rate. Also known as the discount rate, this is the rate depository institutions are charged for borrowing money from Federal Reserve banks. The federal funds rate is used by the Federal Reserve (the Fed) to attempt to control inflation. We find it on rbi website.

"Greeks" is a term used in the options market to describe the different dimensions of risk involved in taking an options position. These variables are called Greeks because they are typically associated with Greek symbols. Each risk variable is a result of an imperfect assumption or relationship of the option with another underlying variable. Traders use different Greek values, such as delta, theta, and others, to assess options risk and manage option portfolios.

These include delta, theta, gamma, vega, and rho, among others.

Delta (Δ) represents the rate of change between the option's price and a $1 change in the underlying asset's price. In other words, the price sensitivity of the option relative to the underlying. Delta of a call option has a range between zero and one, while the delta of a put option has a range between zero and negative one. A less common usage of an option's delta is it's current probability that it will expire in-the-money.

Delta=Change in option value/Change in stock price

Theta

Theta (Θ) represents the rate of change between the option price and time, or time sensitivity - sometimes known as an option's time decay. Theta indicates the amount an option's price would decrease as the time to expiration decreases, all else equal. Theta increases when options are at-the-money, and decreases when options are in- and out-of-the money. Options closer to expiration also have accelerating time decay. Long calls and long puts will usually have negative Theta; short calls and short puts will have positive Theta. By comparison, an instrument whose value is not eroded by time, such as a stock, would have zero Theta.

Theta=Change in option value/Change in time

Gamma

Gamma (Γ) represents the rate of change between an option's delta and the underlying asset's price. This is called second-order (second-derivative) price sensitivity. Gamma indicates the amount the delta would change given a $1 move in the underlying security. Gamma is used to determine how stable an option's delta is: higher gamma values indicate that delta could change dramatically in response to even small movements in the underlying's price.Gamma is higher for options that are at-the-money and lower for options that are in- and out-of-the-money, and accelerates in magnitude as expiration approaches. Gamma values are generally smaller the further away from the date of expiration; options with longer expirations are less sensitive to delta changes. As expiration approaches, gamma values are typically larger, as price changes have more impact on gamma.

Options traders may opt to not only hedge delta but also gamma in order to be delta-gamma ?neutral, meaning that as the underlying price moves, the delta will remain close to zero.

Gamma=Change in Delta/Change in stock price

Vega

Vega (v) represents the rate of change between an option's value and the underlying asset's implied volatility. This is the option's sensitivity to volatility. Vega indicates the amount an option's price changes given a 1% change in implied volatility. Because increased volatility implies that the underlying instrument is more likely to experience extreme values, a rise in volatility will correspondingly increase the value of an option. Conversely, a decrease in volatility will negatively affect the value of the option. Vega is at its maximum for at-the-money options that have longer times until expiration.

Vega=Change in option value/Change volatility

Rho

Rho (p) represents the rate of change between an option's value and a 1% change in the interest rate. This measures sensitivity to the interest rate. The opposite is true for put options. Rho is greatest for at-the-money options with long times until expiration.

Rho=Change in option value/Change in rate of interest

Take Revision

In previous session we see how trading and demat account exactly work, watch list, order, how to place order, portfolio, funds. Trading based on market speculation factors. Basic use of chart, indicators, tools.

One Take Solution

Portfolio build up-

At the beginning or from the trading and demat account opening we want to manage or build our portfolio, investment and trading positions to create asset. For this we know all about fundamental and technical points of stocks. There are more than five thousand stocks are listed in BSE and more than two thousand stocks listed in NSE. But we choose specific stocks for trading and investment, in that sometimes ipo listing gain we make. For portfolio build we refer time, volatility, balance sheet, profit loss statement. There are minimum ten stocks to fifty stocks needed in your portfolio. You can choose penny stocks, mid cap, large cap stocks for portfolio build. Diversification of portfolio is most important, if you have some amount then you can diversified it in various stocks.

Earning Point

Zen technologies, Apollo micro systeme, astra micro, walchandnagar, cochin shipyard, garden reach ship., bharat dynamics, Hindustan aeronotics, beml, iti, Mishra dhatu, globus spirits, united breweries, vst industries, just dial, trf ltd, gm brewaries, radico khaitan, pioneer distilleries, kec intl.

Article

Intraday trading

Hello friends,

Intraday trading is vast subject in stock market, there has no limit to do study and work for it because there has daily trading work. You can find many more strategies to do work intraday. Sometimes we found loss and sometime huge profit gain.

There was once a time when the only people who were able to trade actively in the stock market were those working for large financial institutions, brokerages, and trading houses. But, with the rise of the internet and online trading houses, brokers have made it easier for the average individual investor to get in on the game. Day trading can turn out to be a very lucrative career, as long as you do it properly. especially for those who aren't fully prepared with a well-planned strategy.

Day traders are active traders who execute intraday strategies to profit off price changes for a given asset. Day trading is often characterized by technical analysis and requires a high degree of self-discipline and objectivity. Day trading is defined as the purchase and sale of a security within a single trading day. They use high amounts of leverage and short-term trading strategies to capitalize on small price movements in highly liquid stocks or currencies.

Day traders are attuned to events that cause short-term market moves. Trading the news is a popular technique. Scheduled announcements such as economic statistics, corporate earnings or interest rates are subject to market expectations and market psychology. Markets react when those expectations are not met or are exceeded, usually with sudden, significant moves, which can benefit day traders. Day traders use numerous intraday strategies. These strategies include:

Scalping, which attempts to make numerous small profits on small prices changes throughout the day

Range trading, which primarily uses support and resistance levels to determine their buy and sell decisions

News-based trading, which typically seizes trading opportunities from the heightened volatility around news events

High-frequency trading (HFT) strategies that use sophisticated algorithms to exploit small or short-term market inefficiencies

Day traders also like stocks that are heavily liquid because that gives them the chance to change their position without altering the price of the stock. If a stock price moves higher, traders may take a buy position. If the price moves down, a trader may decide to short-sell so he can profit when it falls.