derivative products in bse and its functioning mechanism

8/9/2019 Derivative Products in BSE and Its Functioning Mechanism

1/19

Derivative products in BSE and itsFunctioning mechanism

GROUP 5


2/19

The Bombay Stoc E!change "BSE# created history on $une %& '((()hen it *aunched trading in Sense! based +utures contract +or the,rst time- .t )as then +o**o)ed by trading in inde! options on $une /&'((/0 in stoc options and sing*e stoc +utures "1/ stocs# on $u*y %&

'((/ and 2ovember %& '(('& respective*y- .t permitted trading in the stocs o+ +our *eading companies name*y0

Satyam& State Ban o+ .ndia& Re*iance .ndustries and T.S3O "renamedno) Tata Stee*#-

Chhota (mini) SENSEX7 was launched on January 1, 2008 !ith asmall or4mini4 maret *ot o+ 5& it a**o)s +or comparative*y *o)er capita*

out*ay& *o)er trading costs&more precise hedging and e!ib*e trading-

3urrency +utures )ere introduced on October /&'((6 to enab*eparticipants to hedge their currency riss through trading in the U-S-do**arrupee +uture p*at+orms-


3/19

Products Traded in Derivatives Segment of theBSE

Sl.

No

Product Traded with

underlyingasset

Introduction

date

/ .nde! Futures Sense! $une %&'(((

' .nde! Options Sense! $une /&'((/

1 .ndividua*

Stoc Option

3oncerned

3ompany Stoc

$u*y %& '((/

7 .ndividua*Stoc +utures

3oncerned3ompany Stoc

2ovember%&'(('

5 8ee*y Option 7 Stocs September/1&'((7

9 3hhota "mini# SE2SE: $anuary /& '((6

; 3urrencyFutures

US Do**arRupee

October /&'((6

ource: Comiled from BSE we!site


4/19

Trade details ofDerivatives in BSE


5/19

.nde! Futures

< +utures contract is a standardi=ed contract to buy orse** a speci,c security at a +uture date at an agreedprice-


6/19

.nde! Futures Product

Sr-2o ProductProduct3ode

3ontract>u*tip*ier

/BSE 1( S?PBSE SE2SE:FUTURES

BS:FUT /5

'BSE S?P BSESE2SE: >.2.

FUTURES

>S:FUT 5

1BSE S?P BSE

TE3@ FUTURESTE3@FUT ;(


7/19

3ontent Period /&'&1 >onth

Tic Si=e

Rs- (-'5 in spread price terms +orS?P BSE SE2SE: +utures contractsRs- (-(5 in spread price terms +orS?P BSEA/(( +utures contracts

Rs- / in spread price terms +orother inde! +utures contracts

Trading ours % -/5 a-m to 1-1( p-m

Cast TradingE!piration Day

Cast Thursday o+ each contract

maturity month-

2ote


8/19

.nde! options

Options contract give its ho*der the right&but not the ob*igation& to buy or se**something on or be+ore a speci,ed date at

a stated price- Genera**y& inde! options are European

sty*e& being those option contracts that canbe e!ercised on*y on the e!piration date-

The under*ying indices +or inde! options arethe various e*igib*e indices as permitted bySEB.-


9/19

.nde! options products


10/19

"ong Dated #tions$"D#%

SEB. & on $anuary //& '((6& had announced the introductiono+ .nde! Options )ith a *onger tenure- BSE introduced 4CongDated Options4 on its agship inde! A Sense! AonFebruary '%& '((6& )hereby the >embers can trade inSense! "in the norma* *ot o+ /5 on*y and not 4mini4 Sense!#Options contracts )ith an e!piry o+ up to 1 years-


11/19

Features o+ Cong Dated Options "CDO#

Cater e!piration dates oHer an opportunity +or *ong terminvestors to tae a vie) on pro*onged price changes )ithoutreIuiring to use a combination o+ short term option contracts-

Premia +or *ongAterm options tend to be higher than that o+short term options because the increased e!piration periodmeans increased possibi*ity o+ *arger movement in the price o+the under*ying-

CongAterm high net )orth investors and institutions need notbe burdened )ith the cost o+ ro**ing over the optionspurchased to protect their port+o*ios +rom do)nside riss-

CDOs oHer a good a*ternative to a *ongAterm trader to gaine!posure to a pro*onged period in a given security )ithouthaving to ro** severa* short term contracts


12/19

Fo**o)ing ne) options series are avai*ab*e +or theSense! "norma* *ot o+ /5# Options contracts arear$unSepDec )ou*d be avai*ab*e- Further& 5 additiona* semiAannua* months o+ the cyc*e$unDec )ou*d be avai*ab*e& so that at any point in timethere )ou*d be options contract )ith up to 1 yearstenure avai*ab*e-


13/19


14/19

STO3@ OPT.O2S

Options on individua* stocs are optionscontracts )here the under*yings areindividua* stocs-

Based on the e*igibi*ity criteria and subJectto the approva* +rom SEB.& stocs arese*ected on )hich options are introduced-

These contracts are cash sett*ed and are


15/19


16/19


17/19

Sing*e Stoc Futures

Options on individua* stocs are optionscontracts )here the under*yings areindividua* stocs-

Based on the e*igibi*ity criteria and subJectto the approva* +rom SEB.& stocs arese*ected on )hich options are introduced-

These contracts are cash sett*ed and are


18/19

Stoc Futures ProductsSr-2o Product Product 3ode

3ontract>u*tip*ier

/

; Ba*rampur 3hini>i**s Ctd

BC3FUT 7(((

6 Ban O+ Baroda BC3FUT '5(

% Ban O+ .ndia BO.FUT 5((

/(

Bharat eavy

E*ectrica*s Ctd- BEFUT /'5

3ontent Period / ' 1 >onth


19/19

3ontent Period /&'&1 >onthTic Si=e Rs-(-(5Trading ours % -/5 a-m to 1-1( p-m

Cast TradingE!piration Day

Cast Thursday o+ each

contract maturity month-

2ote

derivative products in bse and its functioning mechanism

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