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AnandRathi (AR) is a leading full service securities firm providing the entire gamut of
financial services. The firm, founded in 1994 by Mr. AnandRathi, today has a pan India
presence as well as an international presence through offices in Dubai and Bangkok.
Our investment process ensures that your strategy and portfolio are built on solid
foundations. Together you and your relationship manager select the strategy in line with
your individual goals. AR investment specialists then construct and manage your portfolio
in accordance with the chosen investment strategy
wealth management(
Introduction
Affluent individuals need sophisticated advice and strategic guidance to capitalize on
opportunities to preserve, grow and transfer their wealth. In addition, a desire exists
within wealthy families to simplify the management of multigenerational needs and lessen
the profound emotional impact of wealth on family members.
AR offers the most extensive platform of customized servicing, individual strategies and
products to help meet the requirements of the affluent private investor. We provide
comprehensive, integrated investment strategies to address your wealth management
needs.
Working closely with specialists across firm PWM offers an array of products & services,
which includes AR's highly-rated research.
Introduction
Corporate and Institutional treasuries need ever more sophisticated advice that is backed
by serious and credible research. AR IWM provides its institutional clients integrated
wealth management solutions across global markets, which are backed by proprietary
global economic & investment research.
We understand that your needs could range from finding short-term surplus management
strategies to higher yielding and long term investments. The IWM team brings together
the highly-rated AR research across fixed income, currencies and equities markets to
provide investment solutions that meet your complex needs - from simple money-market
mutual funds to complex arbitrage strategies in the equities or commodities markets.
), investment banking
(
Introduction
Investment Banking
Corporate Finance
The AR Corporate Finance team helps clients manage their debt-financing needs by
profiling business and cash-flow risks, defining the alternative sources of funding ,
building in multiple variables such as currencies, fixed-floating, tenure, collateral etc. in a
comprehensive manner and finally negotiating with the prospective lenders / buyers.
The team has also built an impressive track-record in debt restructuring based on its
superior understanding of business needs and relationships with key lenders.
The Corporate Finance team has handled assignments in businesses like paper,
hospitality, telecom, textiles and sugar.
Introduction
AnandRathi Advisors assists companies in realizing tangible improvements in various
facets of their businesses by providing a range of corporate advisory services that
includes the entire gamut from financial, organisational and operational restructuring, to
profit improvement and business turnaround strategies.
Highly qualified and thoroughly professional, our specialists, experts and associates assist
you in conceptualising problems and devising effective solutions, whatever be your need.
We have successfully handled various assignments under industry segments like refinery,
cement, mining, power, paper, metals, airlines and optic fibre.
Introduction
Dynamic Orbits is the international interface of Anand Rathi Group, inter alia Dynamic Orbits is
engaged in building strategic alliances, outsourcing contracts, contract manufacturing
alliances, cross border joint ventures and cross border acquisitions. For further details on the
activities of Dynamic Orbits, please click on www.dynamicorbits.com
Clients can trade through us online on BSE and NSE for both equities and derivatives. They
are supported by dedicated sales & trading teams in our trading desks across the country.
Research and investment ideas can be accessed by clients either through their designated
dealers, email, web or SMS.
Introduction
The Institutional sales and trading team provides cutting edge market information and
investment advice to clients, coupled with excellent execution capabilities. A highly
experienced and reputed team of equity analysts supports the sales team. There is an
extensive focus on research on companies, sectors and macro-economy. The institutional
equity team tracks nearly 250 large and mid-sized companies to give clients an
unparalleled breadth of ideas.
We also provide Investment Advisory Services for institutional clients in India and
overseas for investment in the Indian equity markets.
), commodities, mutual funds and insurance - all of which are supported by powerful
research teams.
The firm's philosophy is entirely client centric, with a clear focus on providing long term
value addition to clients, while maintaining the highest standards of excellence, ethics
and professionalism. The entire firm activities are divided across distinct client groups:
Individuals, Private Clients, Corporates and Institutions.
Top
Milestones
1994:
1995:
1997:
1999:
2001:
2002:
2003:
Institutional equities business relaunched and senior research team put in place
2005:
Top
AR Core Strengths
Breadth of Services
In line with its client-centric philosophy, the firm offers to its clients the entire spectrum
off financial services ranging from brokerage services in equities and commodities,
distribution of mutual funds, IPO’s and insurance products, real estate, investment
banking, merger and acquisitions, corporate finance and corporate advisory.
Clients deal with a relationship manager who leverages and brings together the product
specialists from across the firm to create an optimum solution to the client needs.
Top
Management Team
In-Depth Research
Management Team
Our senior Management comprises a diverse talent pool that brings together rich
experience from across industry as well as financial services.
Our research expertise is at the core of the value proposition that we offer to our clients.
Research teams across the firm continuously track various markets and products. The aim
is however common - to go far deeper than others, to deliver incisive insights and ideas
and be accountable for results.
SERVICES
PHONE TRADE
Call us on 022-40013601 / 3602 / 3603 / 3604 to place your orders in Equity / Derivatives instantly and
Free of Cost. Further, experience the benefits of trading through our Phone Trade facility, the most
convenient way to trade wherever you are.
Dedicated telephone numbers for placing Instant Orders through Cell Phone or Landline from
9:00 a.m. to 6:00 p.m.
Quick information about Pending, Cancelled and the total number of orders placed.
AR is one of India's top mutual fund distribution houses. Our success lies in our philosophy of
providing consistently superior, independent and unbiased advice to our clients backed by in-depth
research. We firmly believe in the importance of selecting appropriate asset allocations based on the
client's risk profile.
We have a dedicated mutual fund research cell for mutual funds that consistently churns out
superior investment ideas, picking best performing funds across asset classes and providing insights
into performances of select funds.
Depository Services
AR Depository Services provides you with a secure and convenient way for holding your securities
on both CDSL(Central Depository Services (India) Ltd (CDSL)) and NSDL(National Securities
Depository Limited (NSDL)).
Our depository services include settlement, clearing and custody of securities, registration of shares
and dematerialization. We offer you daily updated internet access to your holding statement and
transaction summary.
Commodities
Commodities broking - a whole new opportunity to hedge business risk and an attractive investment
opportunity to deliver superior returns for investors.
Our commodities broking services include online futures trading through NCDEX and MCX and
depository services through CDSL. Commodities broking is supported by a dedicated research cell
that provides both technical as well as fundamental research. Our research covers a broad range of
traded commodities including precious and base metals, Oils and Oilseeds, agri-commodities such as
wheat, chana, guar, guar gum and spices such as sugar, jeera and cotton.
In addition to transaction execution, we provide our clients customized advice on hedging strategies,
investment ideas and arbitrage opportunities.
Insurance Broking
As an insurance broker, we provide to our clients comprehensive risk management techniques, both
within the business as well as on the personal front. Risk management includes identification,
measurement and assessment of the risk and handling of the risk, of which insurance is an integral
part. The firm deals with both life insurance and general insurance products across all insurance
companies.
Our guiding philosophy is to manage the clients' entire risk set by providing the optimal level of
cover at the least possible cost. The entire sales process and product selection is research oriented
and customized to the client's needs. We lay strong emphasis on timely claim settlement and post
sales services.
Our services :
• Risk Management
• Due diligence and research on policies available
• Recommendation on a comprehensive insurance cover based on clients needs
• Maintain proper records of client policies
• Assist client in paying premiums
• Continuous monitoring of client account
We have been consistently ranked among the top 10 distributors of IPOs on all major offerings. Our
IPO research team provides clients with in depth overviews of forthcoming IPOs as well as
investment recommendations. Online filling of forms is also available.
FAQS
Why invest?
If you were to open a book on economics and look up the word investing, chances are that you
would find the following definition: investing is building up to meet future consumption demands
with the intention of making surpluses or profits, as they are
What is a share?
Shares or equity represents part of an ownership of a business. So as a shareholder you own a piece
of the action that happens in that business.Why would you want a piece of the action?For the
rewards of course. As a shareholder you have a right over
We know now that investing in shares is akin to owning part of a business. A profitable business
keeps ploughing back profits to earn more profits or should we say "compounding profits".
In the short run, the market is a voting machine--reflecting a voter-registration test that requires
only money, not intelligence or emotional stability--but in the long run, the market is a weighing
machine.
The price is set by the market and it all depends on how many buyers and sellers think the share is
worth that day. Some stocks sell for less than Rs10 a share, others for more than Rs1, 000 a share.
But do not be misled that an Rs10 share is better than a Rs. 1,000 share
Before you decide to make your first share purchase, it helps to take stock of your net worth.
Remember while investing in shares is lucrative in the long run, it is also risky.
Investing in shares is risky but also lucrative over the long run. Hence it makes utmost sense to
have the maximum exposure to shares when you are young and reduce your exposure as you age.
It is not how much you save but where you save it that holds the key to success. Similarly it is what
share you buy rather than how much of it you buy that is more important. After all, when you buy a
share you buy a business.
I am ready to invest. Is there anything that I need to do before I buy my first share?
There are three rules to follow before you take your first dip in the investing waters:
Make a plan
Take into account your strengths and weaknesses
Review the plan often and change it as your needs and circumstances change
Unlike buying clothes from your favorite showroom where you just walk in, buy the stuff you like
and pay for it, buying shares is a little different. Shares are traded on stock exchanges and you can
buy them only from people recognized
The same way you buy one, you just hold sell this time around. You call your broker and tell him or
her to sell your shares (or you enter your sale with an online broker). You'll get the market price of
the stock for that day.
That can be an even better reason for not selling. The price of your stock is almost guaranteed to
fall at some time. Maybe your company will go through a period when business isn't so great.
If you buy a share with the expectation that the price will rise, you are "long" on the stock. On the
other hand, if you expect the price of a stock that you do not own to go down you can even sell it.
Then you would be going "short" on the stock.
Here is the doyen of investing, Benjamin Graham expounding on the distinction between these two
activities. An investment operation is one which, on thorough analysis, promises safety of principal
and a satisfactory return.
Panic selling. There is one certainty about investing in shares--that there will be a number of market
panics during your investment lifetime. What you do during a market panic has a great impact on
the eventual wealth that it creates
What are the different types of orders that can be placed on anandrathi.com?
a) Normal orders-When you sell shares without marking delivery it is treated as a short sale and will
be executed if there are sufficient funds available to execute the transactions.
b) Delivery Mark orders-This intimates the system to take delivery for the order placed. Incase of
buy order the system will block the entire amount for the order placed. Incase of delivery sell order
the system will check your demat stock availability and the transaction will go through only if the
stock is available in your Demat account, once the order is accepted in the exchange the quantity
put for sale is blocked. Once the sell order is executed the entire amount generated from the sell
trade will be available for trading for further trading
c) BTST Orders is Buy Today Sell Tomorrow without Guarantee. They have been discussed in detail
under BTST
d) Stop Loss Order-Stop loss order-An order placed, which gets activated only when the market
price of the relevant scrip reaches or crosses a threshold price, which is called trigger price. Until
then the order does not enter the market but sits with the NSE.
Stop Loss order can be placed while placing a fresh order as well as a square off order.
Buy: Market Price < Trigger price < Order Price. (Trigger price entered should be greater than the
market price)
Sell: Market Price > Trigger price > Order Price. (Trigger price entered should be lesser than the
market price)
When the market hits the trigger price, the order is forwarded to the exchange and the same gets
traded at a price between the Trigger price and the order price
.
What happens in case my shares are short sold?
At any point of time when the shares are short sold and the same are not delivered for the pay-in to
the exchange, then the shares go in for auction wherein the shares are purchased on behalf of the
client in the auction market and delivered to the actual buyer.
To carry on the auction procedure, 150% of the amount shall be blocked in your account. The same
shall be reversed subject to the debit of the actual auction charges.
Settlement
NOTE:-The table depicted above is applicable to delivery trades (the stock exchanges follow a
system whereby the shares bought today will move into the demat account of the customer in T+2
Days). However in the case of BTST, the customer may buy shares of a company today and sell of
the shares bought the very next day .The facility of BTST is available all the scripts other then scrips
which falls under BSE "T", "Z", "TS" and NSE "BE" Series.
What is an AMO?
AMO stands for After Market Order. It is a facility that Anand rathisecurities.com extends to its
customers whereby they can place orders even after the trading hours of a particular day.
a) It allows the customer to place an order even after the regular trading hours (9.56 a.m. to 3.30
p.m.) during which time he /she might have been busy.
b) Based on the fluctuations in the Market on a particular day and taking into account factors such
as the closing price of particular scrip, recommendations on scripts given by Anandrathi.com, the
customer might want to place an order using AMO which would be executed when the market opens
the next day.
Now customers can place After Market Orders after the trading hours of a day. The process is simple
and AMO's can be placed in two ways:
After Market Orders can be placed by the customer himself by logging into his Anand rathi trading
account and choosing AMO.This facility is available in the time slots Anytime between 4.15 p.m. to
9.30 a.m.
Can I fix any price on scrip that I want to place an AMO on?
For particular scrip, An AMO can be placed with a price band of +/-5% of the closing price at the end
of the day. Any AMO for scrip that is beyond this price band would not be executed.
For example:
If the closing price of a scrip X on Monday is 100 Rs., the customer can place an AMO within the
price band of Rs. 95 to Rs.105.
Call & Trade is a service offered by Anand Rathi Securities for its customers, which provides
customers with a facility to trade over the phone.
Anand Rathi Securities provides you a toll free number ----------. You can call from anywhere in
India on our toll free number, without incurring any long distance phone charges.
Once you call our toll free number, our Call & Trade dealer will ask a few questions to verify your
identity. Only after your identity is verified, you would be able to place/ modify/ cancel orders
Can the rates be confirmed using Call & Trade?
Yes. You can use Call & Trade for getting live rates prevailing in the market
You can trade in all scripts that are available for trading at Anandrathi.com.
Can I forward the orders of T2T or suspended scripts till 3:30 PM?
No. You can forward the offline orders till 3:00 PM only, after which no orders will be accepted.
Disclaimer:
Anand Rathi Securities does not take any responsibility and will not be responsible for any claims
against losses incurred due to incorrect information related to shares in the Demat account or
margin available in the trading account. The details of the quantity and shares forwarded to the Call
& Trade executive for order execution will have to be verified by the client while placing the order.
Also Anand Rathi Securities does not take any responsibility for non-placement of order with respect
to the time and date. In case of non-placement of order on the day and of request forwarded, the
same will stand cancelled and fresh request on any other day/ time have to be forwarded.
What are the charges for availing Call & Trade facility?
Yes. Currently, there is no limit on the number of orders that can be placed per call. We may come
with a charges for the call & trade facility after the allotted call limit crossed.
Can I inquire regarding registration / limits / position or Dp related etc queries to a Call &
Trade dealer?
No. For any inquiry, you need to call up our Customer Care on
Details of the order placed through phone can be viewed on the site with respected Userid &
Password and can be confirmed through a Call & Trade Dealer only.
Can AMO orders & Post closing orders be placed through Call & Trade?
Yes. AMO orders can be placed from 4:15pm to 6:00pm & Post closing orders from 3.50pm to
4:00pm.
You can place the normal delivery sell order to sell all the shares bought by you in the previous
settlements till the payout date of the buying settlement.
E.g. Suppose you have bought 100 shares of ACC on Day 1. The settlement day for this buy
transaction is Day 3. You can sell all 100 shares of ACC under BNSTG on Day 2 or on Day 3 till your
buy transaction is settled.
What will happen in case the delivery for shares sold by you is received short?
Anandrathi.com do not provide any guarantee in case short delivery. In case of the short delivery
then Client has to bear the auction charges. you would not be guaranteed against any auction that
you might face due to short allotment on such bought quantity
The brokerage would be charged as per normal delivery brokerage on either side of the transaction.
Please click here to view the Product Details.
How would the movement of shares transacted for in BTST reflect in the Demat account?
The shares that have been bought and subsequently sold under BTST would be first credited and
then debited from your Demat account as per normal pay in and pay out. You would not be required
to do anything different from your normal transaction.
As you are selling the shares under Delivery, no extra limit would be required
I have bought some stock on NSE; can I sell the same on BSE and vice versa?
Yes. You can buy stock on NSE and sell the same, the next working day under BTST in BSE and vice
versa
If you do not Square off the Trading open position then System will Auto-Square off your trading
open position after the cutoff time 3:15 p.m..
Can I buy stock in NSE and sell the same in BSE or vice versa?
You need to take delivery of the stock bought on NSE and then sell the same in BSE and vice versa.
That is, you cannot buy in NSE and square off the same in BSE. However, you may sell the stock in
BSE under BTST on the next working day.
The portfolio tracker is a tool that anandrathisecurities.com has put in place so that investors may
keep a track of how well their scripts are doing at a given point of time. In short it display the
current valuation of the holdings that an investor has.
A portfolio tracker has several advantages to offer .It reveals data on:
1) The gain loss statements of an investor through the buy/sell trades that he has made.
The portfolio tracker also gives data on the average holding cost of each scrip, the quantity of
scripts that the investor holds in his account and the market price of the scripts. The biggest
advantage of the portfolio tracker is that it goes on to explain the unrealized gain/loss of his
individual holdings. This enables the investor to monitor his stock performance.
Debtor's policy:
All trades involve a brokerage firm even if a stockbroker is not used to help with the trade.
Although customers may enter orders for trades via the Internet, customers do not have direct
access to the securities markets and therefore must use a brokerage firm in order to execute their
trades. Customers should also remember to do their homework where their investments are
concerned.
Why should I go for an online trading if I am satisfied with my Broker’s system?
Internet share trading is more convenient and hassle free. No phone calls, No paperwork, No more
writing of cheques, you can trade on your own. Market position will be in front of you. You can
trade while working in the office, while you are at home. If computer/Internet is not available at
your place; you can go to Cyber cafe also. You can take an experience once; you will know the
advantages of that.
Who can open a trading account with anandrathi.com?
The facilities are available to Resident as well as Non-Resident Indians. Individuals as well as sole
proprietary/partnership/corporate firms can open a trading account.
What is anandrathi.com?
It is a Financial Portal for online stock trading. Anandrathi.com is a trade name owned by Anand
Rathi Group.
Why should I trade on anandrathi.com?
Following reasons make you to trade with us.
• User friendly.
• Transparency in Dealing.
• Personalized customer service.
• Brokerage rate is very competitive.
• Instant Trade confirmation.
• Complete protection against fraud and hacking.
• 128 bit super safe encryption – SSL (Secured Socket Layer)
Note : The management reserves the right to change these rates without any prior notice.
If I already have a HDFC Bank account and a Demat account with ARG, can I use these
accounts for online investing?
Yes, you just need to tell us the account details and we shall link up your existing accounts for
online investing.
What about my Trading limits?
ARG allows Trading limits (exposure) depending upon the product selected by you at the time of
opening the account & Respective balance (in terms of Stock & Ledger balance) available in your
trading account.
What if I am holding shares in my account? Can I use them as margin?
You can use your shares and securities along with initial minimum deposit. We will apply a haircut
of exchange var margin on the valuation of your holding and then exposure will be provided. The
shares considered for exposure purpose are NSE top 500 stocks and certain stocks approved by
Anand Rathi Group.
Note : The management reserves the right to change or increase the exchange var margin
(increase the haircut on the Stock Valuation) according to the Market situation without any prior
notice.
Derivatives
What are derivative instruments?
A derivative is an instrument whose value is derived from the value of one or more underlying
asset, which can be commodities, precious metals, currency, bonds, stocks, indices, etc. Four
most common examples of derivative instruments are forwards, futures, options and swaps.
Why Derivatives?
There are several risks inherent in financial transactions. Derivatives allow you to manage these
risks more efficiently by unbundling the risks and allowing either hedging or taking only one (or
more if desired) risk at a time
Mr X will gain even if the price of sugar is Rs 120 a kg because at the time of entering the
contract with Mr Y, Mr X did not know what exactly the price of sugar would be after three
months. So, by agreeing to sell sugar at Rs 100 a kg, Mr X is assured of a certain earning, based
on which he can now plan the financial needs of his business.
Similarly, Mr Y also knows that he will have to shell out a fixed amount, based on which he too
can take care of the financial needs of his business. It will help Mr Y to control his cost.
A customised contract means that Mr X and Mr Y can enter into it on the basis of mutual needs,
and there is no one else to determine the terms of their contract.
In futures, on the other hand, the stock exchange offers certain fixed/standardised contracts for
investors to pick up and trade. Thus, unlike Mr X and Mr Y, who have the freedom to enter into a
contract for any length of time, in futures investors have to choose from the series of contracts
offered for various durations. For example, one month, two months, three months.
In a forward market, both buyer and seller deal with each other, while in futures market, both
buyers and sellers are faceless. Both deal with the exchange and exchange in turn assures
performance of the contract.
Default risk is very high in forward contracts while in futures contracts the exchange takes
ensures performance of the contract.
How does one trade in futures and how is it different from the normal market?
Trading in futures is similar to trading in individual scrips. One has to contact a broker and deal
through him. Trading in derivatives is also screen based just as the cash market. But all the
members who trade in cash market cannot trade in the derivatives market. It requires them to
apply afresh for derivative trading. Currently more than 150 members of the BSE are trading in
futures.
To trade in futures, the person will first have to approach a broker who is authorised to trade in
derivatives. Then the broker will tell him the different series that are available. In India, both the
BSE and NSE offer futures on the Nifty and Nifty respectively, and these are popularly called as
index futures.
So, if you choose the July series, say on July 2, you can buy or sell a future contract based on
your forecast of the value of the index on the expiry date of the contract, which is the last
Thursday of every month. The contract has a minimum size of 50 times the Nifty and 200 times
the Nifty. What this means is if the Nifty is considered to be a tangible item, like any commodity,
then by entering into a futures contract, you intend to buy or sell 50 units of the Nifty or 200
units of Nifty.
Now, suppose you enter into the contract on July 2 and the prevailing Nifty future is at 3350, but
you feel that the Nifty future on the expiry date will be 3500. Technically, your contract is worth
Rs 3350x50, but actually you will pay only a certain per cent of the contract value, and this is
called initial margin. Now, if the Nifty touches 3500 on the expiry date, you will earn Rs 150x50
(that is the difference between 3350-3500), but if the Nifty value on expiry date is 3200, you will
make a loss of Rs 150x50 (that is the difference between 3200-3350).
Why should the exchange pay me or why should I pay the exchange?
A Since the index is not a tangible commodity, no one can deliver the index on expiry of the
futures contract. The exchange acts as the medium to settle the deal.
In case of an option, however, he can buy a right to buy the Nifty on the expiry day. He can talk
to his broker and tell him that he intends to buy an option on Nifty that can be exercised in end
July. The broker will tell him that there are various series available in July itself. Each of the
series expires on the same day, that is the last Thursday of July. But the difference is that the
strike price for different series is different. For example, on June 26, 2001, there could be four
call and four put options series being traded on the NSE.
A put option on the other hand gives the right to sell at the specified price on or before expiry
date.
If you buy a Nifty option for July at 1060, it means you are authorised to buy the Nifty at 1060
on the expiry date.
If on July 27, the Nifty closes at 1080, just like futures, here also you stand to gain and you
make a profit of Rs 20x200. As the contract size is 200, one thus gets 20x200=Rs 4,000 on
expiry date.
It seems that while entering into this type of contracts, people know that they may or
may not exercise the option. Why is it that they risk the premium amount?
While buying an option nobody is sure that he will finally exercise the option when it expires.
This uncertainty is the only reason behind the option buyer's decision to buy.
When one enters into a futures contract he is able to overcome the uncertainty. But in that case,
when you enter a contract to buy sugar at the rate of Rs 15 per kg, say after three months,
assuming that the market price will be much higher then, it may so happen that at the time of
expiry of the contract, you realise that the price of sugar in the market actually declined and you
are now compelled to take delivery at a price higher than the market price.
But instead, if you buy an option you get the liberty to buy the index only if it is profitable to
you, which means you will buy it only if the market price is higher than the price specified in the
contract. Similarly, you have the option not to sell the index if it is below the price specified in
the contract.
In short, the loss you will incur by not fulfilling the contract is only the premium paid at the time
of entering into the contract. By paying the premium you are insured from the loss you may
have to bear in case of an adverse price movement.
But if the price moves favourably, you can gain by buying or selling the index. Thus, for
example, if you take a call option on the Nifty at 3500, but on July 28 it actually ends at 3700,
you will gain because you will still be buying only at 3500. But if it ends below 3500, you have
the option not to honour the contract, and thus the only loss you will incur is the premium paid
at the time of entering into the contract.
Similarly, if you take a put option at 3500, and the Nifty actually ends on July 28 below that
level, you gain by selling at a price higher than the current price. But if it ends above 3500, you
have the option not to sell and thus the only loss you will incur is the premium paid.
He receives premium through the clearing house and is obliged to buy or sell the underlying if
the buyer of the contract so desires.
Does that mean, buying a put option is same as writing the option?
No! An option writer can write a call or a put option. Writing and selling an option are
synonymous. When a writer writes a call option he creates a short position and the buyer of that
call option creates a long position. On the other hand when an options writer writes a put option
he creates a long position, the buyer of this contract takes a short position.
In the derivatives market a long position is created when someone buys or writes a contract
which gives him a right or obligation to buy something, it is index in this case. A short position
on the other hand is created when someone buys or writes a contract, which gives him a right or
obligation to sell something - the index.
In case of physical settlement short side delivers to the specified location while long side takes
delivery from the specified location of the specified quantity / quality of underlying asset. The
long side pays the EDSP to clearing house/ corporation which is received by the short side.
Cost of carry is the sum of all costs incurred if a similar position is taken in cash market and
carried to maturity of the futures contract less any revenue which may result in this period. The
costs typically include interest in case of financial futures (also insurance and storage costs in
case of commodity futures). The revenue may be dividends in case of index futures.
Apart from the theoretical value, the actual value may vary depending on demand and supply of
the underlying at present and expectations about the future. These factors play a much more
important role in commodities, especially perishable commodities than in financial futures.
In general, the Futures price is greater than the spot price. In special cases, when cost of carry is
negative, the Futures price may be lower than Spot prices.
What is Contango?
Under normal market conditions Futures contracts are priced above the spot price. This is known
as the Contango Market
What is Backwardation?
It is possible for the Futures price to prevail below the spot price. Such a situation is known as
backwardation. This may happen when the cost of carry is negative, or when the underlying
asset is in short supply in the cash market but there is an expectation of increased supply in
future - example agricultural products.
Based on the volatility of market indices in India, the initial margin is expected to be around 8-
10%.
What is marked-to-market?
This is an arrangement whereby the profits or losses on the position are settled each day. This
enables the exchange to keep appropriate margin so that it is not so low that it increases
chances of defaults to an unacceptable level (by collecting MTM losses) and is not so high that it
increases the cost of transactions to an unreasonable level (by giving MTM profits).
It is also responsible for risk management of its members and does inspection and surveillance,
besides collection of margins, capital etc. It also monitors the net-worth requirements of the
members.
The other role of the Clearing House / Corporation is to ensure performance of every contract.
Non-diversifiable risk or market risk is an outcome of economy related events like diesel price
hike, budget announcements, etc that affect all the companies. As the name suggests, this risk
cannot be diversified away using diversification or adding stocks in portfolio.
There is another strategy of playing the spreads, in which case the speculator trades the "basis".
When a basis risk is taken, the speculator primarily bets on either the cost of carry (interest rate
in case of index futures) going up (in which case he would pay the basis) or going down (receive
the basis).
Pay the basis implies going short on a future with near month maturity while at the same time
going long on a future with longer term maturity.
Receiving the basis implies going long on a future with near month maturity while at the same
time going short on a future with longer term maturity.
The European kind of option is the one which can be exercised by the buyer on the expiration
day only & not anytime before that.
Depository System
What is a depository? Top
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How does the Depository System operate?
What is dematerialisation?
Who is an Issuer?
What is an ISIN?
Whether different securities issued by the same Issuer will have same ISIN?
A. The operations in the Depository System involve the participation of a Depository, Depository
Participants, Company/Registrars and Investors. The company is also called the Issuer.
A Depository (NSDL and CDSL) is an organisation like a Central Bank, i.e. Reserve Bank where
the securities of an investor are held in electronic form, through Depository participants.
A Depository Participant is the agent of the Depository and is the medium through which the
shares are held in the electronic form. They are also the representatives of the investor,
providing the link between the investor and the company through the Depository.
To draw analogy, the Depository system functions very much like the banking system. A bank
Account Opening
Am I eligible for opening a trading account?
Any individual, Hindu undivided family (HUF), proprietary firm, partnership firm, or a company
can open an account with Anandrathi.com.
To open an online trading a/c you can apply online or visit any of our branches. Click on the link
to find out the nearest branch.
You can start trading by placing a minimum margin of Rs. 10000. This minimum margin can be
in the form of Cash or Stocks.
What are the documents required for opening a online trading a/c?
Passport size photo, Copy of pan card, copy of residence proof, photo identity proof, copy of
bank details.