Category Archives: Futures & Options

Money Making Candlestick

Money Making Candlestick Formations Candlestick Line   Hammer An important bottoming candle-stick line.  The hammer and the hanging man are both the same line, that is a small real body (white or black) at the top of the session’s range and a very long lower shadow with little or no upper shadow.  When this line appears during a downtrend it becomes a bullish hammer.  For

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Money Making Candlestick

Money Making Candlestick Formations Candlestick Line   Candlestick Line Candlestick lines and charts — traditional Japanese charts whose individual lines look like candles, hence their name.  The candle- stick line is comprised of a real body and shadows.   See “Real body” and “shadow.”   Candlestick Formations Belt-hold line — there are bullish and bear- ish belt holds.  A bullish belt hold is a tall white

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Futures Stock Options Glossary

QUICK REFERENCE GLOSSARY ON FUTURES AND OPTIONS FUTURES TERMINOLOGY SPOT PRICE: The price at which an asset trades in the spot market. FUTURES PRICE: The price at which the futures contract trades in the futures market. CONTRACT CYCLE: The period over which a contract trades. The index futures contracts on the NSE have one month, two months and three months expiry cycles which expire on the last Thursday of the month. Thus a January expiration

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Stock Market Trading

ADVANTAGES AND BENEFITS OF COVERED CALL STRATEGY ‘The biggest advantage of covered call strategy is it increases and improves the odds of successful trading. Another biggest share tips benefit is that it can be implemented in two of the three possible stock movement scenarios. If the stock goes up, it’s profitable. Ifthe stock goes sideways, it’s profitable. The only case when it is not profitable is

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Stock Trading

WRITING COVERED CALLS  Writing (Selling) Call Options when you already own the underlying is called writing covered call options. It is against writing Naked options which can have unlimited risk. HOW WRITING COVERED CALL OPTION WORKS As discussed earlier a Call is the right to buy an underlying asset above a certain price, and before a certain date. Now only the liquid calls in

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Options Premium Value

TAXATION OF DERIVATIVES TRANSACTIONS IN SECURITIES  SECURITIES TRANSACTIONS TAX ON DERIVATIVES TRANSACTIONS Finance Act (N0.2) of 2004 has introduced Securities Transactions Tax on all derivatives transactions entered into a recognized stock exchange. This tax is payable by the seller of the derivative instrument. The rate of tax free trading tips applicable on the same has been revised to 0.0133% of the value of taxable securities transaction

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Equity Index Options Premium Account

ACCOUNTING AT THETIMi OF PAYMENT/RECEIPT OF MARGIN Payments made or received by the seller/writer for the margin should be credited/debited to the bank account and the corresponding debit/credit for the same should also be made to “Equity Index option Margin Account” or to “Equity Stock Option Margin Account, free trading tips as the case may be. Sometimes, the client deposit a lump sum amount with the

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Equity Stock Option

ACCOUNTING IN CASE OF DEFAULT When a client defaults in making payment in respect of a daily settlement, the contract is closed out. The amount not paid by the client is adjusted against the initial margin. In the books of the client, the amount so adjusted should be debited to Mark to Market Equity Index Futures account with a corresponding credit to ‘Initial Margin

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Equity Index

ACCOUNTING AT THE INCEPTION 0f THE CONTRACT Every client is required to pay to the trading member/ clearing member, the initial margin determined by the clearing corporation as per the bye-laws/regulations of the exchange for entering into an equity index futures contracts. Such initial margin paid/payable should be debited to “Initial Margin – Equity Index futures account”. Additional margins, if any, should also be accounted

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Future Trading

REPORTING OF CLIENT MARGIN Clearing Members and Trading Members are required to collect upfront initial margins from all their Trading Members L constituents. Clearing members are required to compulsorily report, on a daily basis, details in respect of such margin amount due and collected, from the Trading Members/Constituients clearing and settling through them, with respect to the trades executed and open positions of the

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