Let me try to explain what new types can be used. Remember that some of the following fundas are speculation because it's only when the actual derivative is announced is when we know exactly what it means. Right now it's a very "global" sort of announcement.
- Mini contracts: Smaller versions of actual futures or options contracts. Typically each futures contract should be of around 2 lakh underlying value. So when the Nifty was 4000, the lot size of an F&O Nifty contract was set as 50. But now it's reached 6,000 - and with a 50 Lot size, the value is around 3 lakhs. RNRL, whose lot size is 7150, has an underlying value of more than 10 lakhs (at about 150 market price). This is obviously too high, but the exchanges can't go around manipulating lot sizes very often, and of course small investors can't use such futures at all. A mini-contract will help reduce the amount of the underlying derivative - for example, a mini-RNRL contract may be 1/10th of the original - a size of 715 - which can be traded by a smaller investor as well.
- Longer tenure options: Currently only options for current month and the next two months are traded. This may be extended, and I would imagine this may only extend to 6 months. Still, the option market is extremely lousy; there's very little liquidity in most stock options (Nifty options are ok though) and very very big bid-ask spreads. Given that very few options trade on even the current month, introduction of 6 month options is probably irrelevant. Try searching for traded options on the BankNifty. You'll find out what I mean.
- Volatility indices/F&O: The US has a volatility index - the VIX - which gives people an idea about how broad the range is that the market moves by. Having a tradeable index gives one the opportunity to do interesting arbitrage such as writing calls or puts and being long a volatility index, thus giving one a hedge in case the option gains volatility premium.
- Options on Futures: This is speculative but I believe they mean options with the future as underlying rather than the stock. This is a waste of time, because that's how it works now anyhow.
- Exchange Traded Currency F&O: I don't know if this means rupee versus other currencies or stuff like USD-JPY but whatever it is, will be good for us.
- Exchange Traded Products for different investment strategies: I don't know what this means, but I hope it means the ability to provide ETFs or such that use system trading concepts rather than just matching an index. This is something Moneyoga would be intensely interested in - just need more clarification on the terms used.
Related posts:
- The SEBI note and why FIIs are creating a fuss Firstly, sorry for being silent the last two days. Life's...
- SEBI introduces legislation for investment advisers SEBI has introduced rules for investment advisers which specifically require...
>Deepak this is not about the markets.I see that your posts in the blog are done at midnight or post that.I wonder when you sleep.Sorry for telling this maybe u could have caught Madras Eye because of this.
Hari
11.15.07 at 3:25 AM
>What is the tax on futures/derivatives? I don’t think you pay securities transaction tax on derivative trading. Does that mean tax implication is 30% and if I do about 10 transactions in F&O, turnover will touch nearly a crore and that requires audit by a IT professional.
regards,
mahesh
11.16.07 at 9:36 AM
>mahesh: You do pay stt on futures – 0.017% on selling. So it classifies as a transaction on which you do only STT.
Btw, even if it were a business, the turnover is only the sum total of your profits/losses, whcih can be less than 2 cr.
(Also Audits are now only above 2 cr)
11.16.07 at 11:51 AM
>Can anyone help me in arbitration, or sensible hedging using Stock options. (The last time I had read about arbitration was in a pdf article known as Stocks Made Simple does anyone know where to find this article). If so please let me know regards
Myfuturestock
06.23.08 at 8:06 AM
MF Global had quite a few of the smartest men in the financial industry managing their assets. They also had access to the ultimate insider info, because their CEO, Jon Corzine, was a Federal Reserve Bankster insider. So, how could so many of the nation’s brightest make such boneheaded decisions?
Once again I want to emphasize that for every loser in the financial derivatives market, there is an equal and opposite winner, making tons of cash.
Since 70% of the 1500 trillion dollar derivatives market is bets against interest rates going up or down, one would think that the former Chairman of Goldman Sachs would have some kind of clue on what the banksters were doing with interest rates. Some would argue that the loss of $40 billion dollars was a huge mistake. I would argue that there are no mistakes when it comes to the Satanic Psychopaths!
11.08.11 at 12:03 AM