Options as a Strategic Investment » Online Trading

Online Tutorial About Indian Stock Market â Indiaâs Nse & Bse Share Markets

admin — Wed, 20 Jan 2010 21:08:57 +0000

THE NATIONAL STOCK EXCHANGE OF INDIA (NSE) Located in Indiaâs financial capital Mumbai, the National Stock Exchange (NSE) is the third largest stock exchange in the world. During 31 December 2005, NSE VSAT terminals, 2799 in total, were spanning across 320 cities of India. The NSE has been a podium for securities exchange for 14 years now! Thousand member strong, NSE provides dealing of different securities, some of them being equity, corporate debt, certificate of deposit, commercial paper, and central and state government securities. National Securities Clearing Corporation, India Index Services and Products, National Securities Depository, and NSE-IT (trading technology) are the associates of NSE. Owner of diverse financial and insurance establishments, NSE can be broadly divided into three segments:

GENESIS OF NSEIt all began 16 years back, in November 1992, when the NSE was integrated as a tax-paying company. In April 1993, NSE was given the status of a stock exchange under the Securities Contract (Regulations) Act of 1956. A year later, in June 1994, NSE began operations in the Wholesale Debt Market (WDM), and in November that year, the Capital Market (Equities) Segment of the NSE began operations. Two years hence, in 1996, NSE became the first exchange in India to trade derivatives specifically on an equity index. In the new millennium, NSE began Indian Internet Online trading system. Today the NSE deals in online examinations and award certification. Comprising branches all over India, NSE introduced Indiaâs first clearing corporation (National Securities Clearing Corporation Ltd.) and Indiaâs first depository (National Securities Depository Ltd.). NSE is Indiaâs earliest national, anonymous, electronic limit order book (LOB) exchange that deals with securities.

MARKET INDICESNSE established an index services firm called IISL â India Index Services and products Ltd. â and opened numerous stock indices, including:

The other NSE Indices are:

MARKET CAPITALISATIONCurrently, NSE has four important capital market segments:

MAJOR COMPANIES OF NSEThe major companies listed with the NSE are:

The top investors of NSE are:

LOCATION OF NSENational Stock Exchange of India Ltd.Exchange PlazaPlot No. C/1, G BlockBandra-Kurla ComplexBandra (E)Mumbai 400051

BOMBAY STOCK EXCHANGE (BSE)

Having its headquarters in Mumbai, the BSE SENSEX is the stock index or SENSitive indEX of the BSE. The oldest stock exchange of Asia, the BSE SENSEX, also known as BSE 30, is the focal stock index of India. There are 4800 companies listed with the BSE. As of July 2007, the total equity market capitalization of the Bombay Stock Exchange was US$ 1.005 trillion. The Singapore Exchange has become an alliance of BSE by acquiring a strategic investment in the BSE.

GENESIS OF BSE

Way back in 1986, the BSE introduced the stock index that eventually became the most important stock index of the country. The SENSEX was based on market-capitalisation-weighted method and included stocks of some of the top financial houses. Noted financial analyst and columnist, Mr. Deepak Mohoni in the year 1990, introduced the term âBSE SENSEXâ which is an acronym for Bombay Stock Exchange SENSitive indEX. Since September 2003, the SENSEX is measured on the method of free-float capitalisation.

MARKET INDICES

Apart from maintaining the BSE SENSEX, the Bombay Stock Exchange also maintains stock indices like:

The BSE gives information on the price, charting, announcements, company contact, shareholding pattern and results of the companies that are enlisted in the exchange. The Board of Directors, encompassing eminent financial professionals, Managing Director of the exchange, and the representatives of the Trading Members, maintain the overall functionality of the exchange.

BSE also gives the Beta value of the SENSEX Scrips, Beta being calculated by the formula: Beta = Co-Variance (SENSEX, Stock)/Variance (SENSEX).

While listing securities that may be from public limited companies, central government, state governments or other financial institutions, there are certain objectives followed by the BSE:

BSE SENSEX OVERVIEW

The BSE SENSEX comprises thirty stocks and is a value-weighted index. The stocks listed here are the most active stocks on the BSE. The BSE SENSEX has a base value of 100. The relevant authorities update BSE SENSEX and in the process inspect and change the SENSEX, the underlying idea being that the SENSEX represents the prevailing market condition.

BSE PERFORMANCE

Since June 1990, the BSE Index has been increasing ten-fold. As per the data available, since April 1979, the long run rate of return on the BSE SENSEX has been at almost 0.52% every week, with the rate of standard deviation being almost 3.67%. The returns thus have been 27% per year. However after inflation, the figure has come down to 18% per year.

BSE COMPANIES

Given below is a catalogue of stocks listed in the BSE:

Is Indian Stock Market Still Good for Nris to Invest?

admin — Sun, 17 Jan 2010 21:40:39 +0000

Oil surpasses $140 per barrel, gold slowly heading towards a promising upward move, and to add fire – inflation in India hitting all time highs.

So you as an NRI are confused whether to invest in India at these levels or not? Well this is the reality of the world we are currently living in. While most people are struggling to make ends meet. NriInvestIndia.com is capitalizing this golden opportunity (current low market levels) to make its non resident clients to make investments in stocks that are trading way low, almost 60% to 70% from where they were trading 6 months back. We assume that the markets are definitely acting pretty volatile with no buying coming in from either the hedge fund or the Indian mutual funds side, but still we believe that these levels are pretty attractive but only for those investors who want to get into the Indian share market with a long term view.

This long term view should be of a minimum of 3-4 years, and one can expect a return of 20-30% on their capital invested. This basically boils down to prudent investing with a long term approach if the investor wants to generate huge profits over a period of 3-4 years in this bearish Indian market, which is totally being dictated by the global slowdown and the US recession (USA – recession). If you have ever wondered what it would be like to be a good NRI investor or stock investors in the stock markets of India (both BSE & NSE) and how you in fact could make some good money or a living by trading such markets, NriInvestIndia.com will not only tell you how you can open an NRI Account and invest using FMPs – fixed income maturity plans or SIPs – systematic investment plans but also assist you in investing in the best and top Indian mutual funds that could yield you high returns when the markets start bottoming out. We ate NriInvestIndia.com pledge to provide the most comprehensive investment advisory services and options to NRIs, PIOs and OCIs that would benefit person of India origin in a long run.

Whether you tend to be conservative or aggressive, NriInvestIndia.com can work hand in hand with your by giving you professional investment advising and financial consultancy to build a solid portfoilio that can give you good returns when you retire. Please visit www.nriinvestindia.com to learn more about the NRI services like: Demat Account, NRI Trading Account, NRI Banking Services, PAN Card Assistance in India, Portfolio Management Services, Derivative Trading & Indian Mutual Funds assistance.

Online Trading Education – Keep Yourself Updated With Online Trading Education

admin — Tue, 15 Dec 2009 22:05:29 +0000

Let us accept that investment trading is not for all. Brokers , like lawyers and doctors have their own language, such that it can leave you with nothing to say when you hear them speak.
Yet through these brokers, we also heard how one can make the most of its revenues through investment. But it would be a very hard task if we did not understand the basic language of the industry.
While it is easier to retain a broker to do the job for you, it is always good to have your basics right. So try and get a little education in trading.
One of the great benefits of technology is that, nowadays, there is no need to go back to school or to get books on investments. All you need is your PC and Internet access and voila! You will get your business online education in the shortest time possible.
To begin, you must first determine what kind of instrument you are interested in. For example, if you are the type that is based on risk and holds the credo of the company, “a risk high, high returns”, maybe you are cut out for futures trades, and if you are more of a conservative you may opt for something else.
You can find a lot of info on the internet to get you started.
Because of the large number, some vendors offer free education online trading. They basically give you a briefing on what your investment is all about. They could also give some tips on a successful strategy. But the drawback is, it is only in theory that they can help you.
Others offer their training on the net for a course fee. They will provide a software which you will need to download and install. This is a definitely more interesting option, and some even give you access to their trade exchange provider. So they basically try and get you started on in trading, asap.
Also, it is good to remember the rapid pace of technology focused on the market we have now consistently shows the value of having the right info at the right time. A minute’s delay can cost you actually enormous loss. It is therefore essential that you as a trader keep one step ahead of others. Adapting the technology to work for you.
To help you with all your needs in education online business, you may want to consider purchasing an online stock trading software. Look for software that can provide technical graphics, real-time quotes background info on the companies you are looking at.
If you are new to the market, it is safest to make the best use of teaching online trading by investing with a right supplier. Search on the net, take the time to review a few providers, and better still if you have a colleague who has been through the mill get his first hand advice.
It would also be interesting to invest your time on those who give you the software, you will need once you start to trading. Suffice it to say that the cost of your investment. Furthermore,if you research your moves well, you will get back a lot more than what you invested.

Foreign Exchange Trade – Various Pitfalls Exposed

admin — Mon, 14 Dec 2009 21:08:05 +0000

The forex market involves trade in currencies of different countries. Referred to as forex generally, most people do not realise that this trade has specific restrictions in specific countries. Individuals are generally not allowed to trade in this market, since it is restricted to governments, authorised financial institutions, and authorised banks and authorised dealers. Every country has its own rule on who can operate in the foreign exchange market.
In today’s more open world, and increased flexibility now being found in most countries regarding investments and trade, forex markets too have emerged as a source of income for most governments, authorised traders, and authorised banks.
The key word here is authorised. Only authorised agents, be they firms, financial institutions or banks, or dealers, they have to be authorised either by the Central Bank of their country or by a law which permits them to trade. In some countries individuals are barred.
Since foreign exchange markets operate on demand and supply of currencies, and the result is always in cash, it is an attractive and lucrative market. And as an individual you may succumb to the temptation of trying your hand at it. First and foremost you must know whether as an individual are you allowed by your country to trade in the forex market? Don’t get taken in by ads which say you are. Check with you Bank or a known financial institution. Seek specific details. Generally, you may be authorised provided if you fill in a particular form and submit it to a designated authority. If you don’t have that piece of paper, well you may well be penalised quite heavily! That’s one scam that’s doing the rounds. You need to check it out.
Why trade in foreign currency? Let’s imagine you are going to another country. When you reach there, you have the option to pay in international currency, say the dollar, or in local currency. If the dollar is strong, i.e. it gets you dollar x + 10 local currency, it makes obvious sense to convert the dollar to the local currency since it gives you more value. However, do note that exchanging currency carries a fee, and you have to factor in that.
When you are returning, the local currency, unless it is a prominent country, you may wish to convert it back to your own currency; here too, you will have to pay a fee, and you will receive less – remember that when you converted in that country you got more; when returning to your own country, the value goes down!
That’s what makes the foreign currency markets tick. The value of a currency was earlier linked to the gold reserves. Later in the early 70s of the last decade, it moved to a more liberalised system which was based on the economy of each country, and how much trade deficit (exports minus imports) and how much was GDP growth (Gross Domestic Product) was, inflation rates, and so on. Obviously, countries short of an ‘x’ currency to pay for its imports had to find that currency in the market, and it would pay a commission to buy that currency to pay for its imports. This goes on throughout the day and night, throughout the year.
Since the sums traded are huge, running into trillions of dollars, the arbitrage opportunity is calculated even upto the 8th digit i.e. say one dollar is equal to 1.45678432 pounds sterling. A change in the last digit of 2 meant that when you are dealing with trillion dollars, you can imagine the amount it would lead to. These calculations and algorithms are best left to those who know their stuff – the economists and analysts. And they command a fancy price, because of their expertise, and you will find them in governments, financial institutions, and in banks, and with authorised dealers.
You won’t see them on the roadside, or even broadcasting their services, unless they are authorised. it’s best if you want to invest safely, and avoid the scams, then you better check with your banker, who knows best. Yes, there are a number of financial institutions that now offer foreign exchange linked bonds and stocks; check that they are authorised. See the proof for yourself. if they are in order, go ahead. There are many pitfalls.
In dealing with foreign currencies, no matter what one reads, it takes time for money to really flow in. Short term dealing does not help. Long term is the route to take. And always keep score of what is happening.
The moral of this story is play safe, check the credentials with someone who knows how, and that is generally your banker, and simply avoid the scamsters. Banks and financial institutions are conservative because they are dealing with other people’s money, and they know best. They can hire the talent, and they do. Take their advice alone.
Forget the rest.

Options Trading Strategies, Basic Concepts

admin — Sat, 28 Nov 2009 02:15:25 +0000

When venturing into the options market, the best way to get the lay of the land is to be acquainted with at least some of the more elementary concepts. These will aid the new investor in successfully executing basic trading strategies.
Two basic terms, the call and the put, are the epicenter of the trading strategies. To buy a call confers the right, not the obligation, to buy at a price that is pre set. Conversely, puts give the buyer the right to sell at a pre set price. Options are both sold and bought, meaning that the seller grants the buyer the right and takes on an obligation to fulfill the other side of the trade.
The variations to this maneuver include:
Long Calls
The long call is the easiest to understand and is the most basic concept. MSFT (Microsoft) traded at $28 with June 31 options that were to expire on the third Friday of June. The strike price was $31, meaning that it was pre set so if exercised it had to be bought at that price.
Short (Naked) Calls
When the writer, the person selling the option, does not own the underlying stock and the option is exercised, then he or she is obligated to sell. Under those circumstances, that action is considered a naked call. Because the person is on the selling side of the contract, his position is considered to be short.
The short call status incurs the most profit by the amount of the premium if the market price of the underlying asset decreases. When the price exceeds the strike price by more than the premium, then the short position takes a loss.
Long Put
When a trader anticipates that the future market price of an asset, such as a stock, will fall before the expiration date is able to sell the stock at a fixed price. The buyer, put buyer, is not obligated to sell the stock, but he or she does have the right.
If the market price does drop below the strike price before the option expires and the decrease is more than the premium paid, then the seller profits. If the price increases or fails to drop enough to cover the premium then the trader will allow the contract to expire worthless.
Short Put
When a trader speculates that the future market price will rise, they can sell the right to sell an asset at the predetermined price.
If the asset’s market price increases, the short put position incurs a profit that is equal to the amount of the premium. This amount excludes any transaction costs and commissions. However, if the price drops below the strike price by more than the premium amount then the writer loses the money.
There are several trading strategies that are basic to the market. These strategies employ the characteristics of four basic trading positions. These strategies have one of several outcomes: pure profit plays, speculating on gaining a profit or creating a combination of speculation and hedging.
When positions move in opposite directions, it is called hedging. Hedging bears a profit less that sheer speculation, but they do compensate by offloading a certain degree of the risk.
Bull spreads and bear spreads are common strategies that can help the trader manipulate the market, depending on the market emotion. Bull spreads utilize a long call with a low strike price and combine it with a short call at a higher strike price and a short put with a higher strike price. On the other hand, bear spreads use a short call with a low strike price and a long call with a high strike price. Alternatively, the short put can be used with a low strike price and a long put can be used with a higher strike price.
There is a great deal of software on the market that can aid in these types of trades. Options trading software can offer users concrete demonstrations of the how these strategies work. They show how they behave under different assumptions regarding future prices, volume and other factors, combined with various expiration dates and strike prices to show how these different scenarios can result in a profit or a loss.

Options as a Strategic Investment » Online Trading

Online Tutorial About Indian Stock Market â Indiaâs Nse & Bse Share Markets

Is Indian Stock Market Still Good for Nris to Invest?

Online Trading Education – Keep Yourself Updated With Online Trading Education

Foreign Exchange Trade – Various Pitfalls Exposed

Options Trading Strategies, Basic Concepts

Online Tutorial About Indian Stock Market â Indiaâs Nse & Bse Share Markets