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DECLARATION

I hereby declare that the project titled A STUDY ON DERIVATIVES


(FUTURES

&

OPTIONS)

done

EXCHANGE OF INDIA LIMITED

at

INTER-CONNECTED

STOCK

submitted by me as part of partial

fulfillment for the award of the Masters of Business Administration, to


ARADHANA

SCHOOL

OF

BUSINESS

MANAGEMENT,

Osmania

University, is a record of bonafide work done by me.


I also declare that this report has to my knowledge is my own and is
neither submitted to any other university nor published any time before.

DATE:

(MIR HASEEB

ALI)
PLACE: HYDERABAD

H.T.NO : 2281-14-

672-053

ABSTRACT

The study is based on financial Derivatives with special reference to


futures and options at ISE India Ltd.

Derivative market has existed from

centuries as need for both users and producers of natural resources to hedge
against price fluctuations in underlying commodities, bonds, currencies, stocks
and stock indices.
In the Derivatives market Futures contract was designed to solve
limitations that existed in Forward contracts Options are also play major role in
Derivative In bullish market the call option Writer Incurs more profit, where as
the in bearish market the call option holder will incur more losses and the put
option writer will get more profit, so he is suggested to hold as put option.
Derivatives market is an innovation to cash market approximately its daily
turnover reaches to the Equal stage of cash market in cash market the
investor has to pay the total money, but in derivatives the Investors has to
pay premiums or margins, which are some percentage of total money
Derivatives are mostly used for hedging purposes.
The derivative market is newly started in India and it is not known by every
investor, so SEBI has to take steps to create awareness among the investors
as bout the derivatives segment In order to Increases the derivatives market
in India, SEBI should revise some of their regulations like contract size,
Participation of FILL in the derivatives market Contract size should be
minimized because small Investors cannot afford this much of huge premium.

ACKNOWLEDGEMENT
I would like to express my gratitude for all the people, who extended
unending Support at all stages of the project.
This report is a product of not only my sincere efforts but also the guidance
and morale support given by the management Inter-Connected Stock Exchange
Of India Limited, Hyderabad.
I express my sincere gratitude to my guide Mr. M.RAMA SUBBA RAO,
Managing Director & Guide of INTER-CONNECTED STOCK EXCHANGE OF
INDIA LTD. Hyderabad for sparing his valuable time in giving the valuable
information and suggestions all through, for the successful completion of the
project.
I wish to express my sincere thanks to our Dr. PRINCIPAL PRAKASH SIR,
and Ms. ALGI PHEBE NISSI (Project Guide), and also the management and
staff of my college ARADHANA SCHOOL OF BUSINESS MANAGEMENT, for
providing the guidance and support.
I would like to acknowledge, my sincere thanks to all the executives at InterConnected Stock Exchange Of India Limited, Hyderabad who have extended
helping hand in giving the information and being a part of the study.

(MIR HASEEB ALI)


H.T.NO : 2281-14-672-053

CONTENTS
CHAPTERS

CHAPTER NAME

INTRODUCTION

1.

PAGE NO.

1-5

NATURE OF THE
STUDY
SCOPE OF THE STUDY
OBJECTIVES OF THE
STUDY
METHODOLOGY
LIMITATIONS OF THE
STUDY

2.

LITERATURE REVIEW

3.

COMPANY PROFILE

4.

DATA ANALYSIS
AND
INTERPRETATION

5.

FINDINGS
SUGGESTIONS
AND
CONCLUSION

6 - 56
57 - 62

63 - 87

88 - 91

BIBLIOGRAPHY

93

92 -

LIST OF TABLES

Table
s No.

TOPIC

PAGE
No.

DIFFERENCE B/W FUTURES AND OPTIONS

20

FUTURES AND OPTION CONTRACT SPECIFICATION

56

CALCULATION OF MARGIN MONEY

69

STATEMENT SHOWING LONG POSITION MARGIN


BALANCE

71

CALL OPTION

77

PUT OPTION

78

LIST OF FIGURES

Figur
e No.

TOPIC

PAGE
No.

PAY-OFF FOR A SELLER OF FUTURE

22

PAY-OFF PROFLE FOR BUYER OF A CALL OPTION

27

PAY-OFF PROFILE FOR SELLER OF A CALL OPTION

28

PAY-OFF PROFILE FOR BUYER OF A PUT OPTION

29

PAY-OFF PROFILE FOR SELLER OF A PUT OPTION

30

FUTURE PRICE

70

CALL OPTION

77

PUT OPTION

78