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Originally Posted by anand_saraf Hi Ravvee,
Yes, very much HDFC... :-)
Thanks for the info - I haven't really traded F&O before - just delivery based trades in the past. Do you buy and sell F&O in the same way as regular trades - other than the usual advice of "stay away from F&O" - any suggestions on a good approach for a beginner? |
On HDFC-sec online trading platform (no I do not work for them but am a customer and use it regularly), you can buy and sell shares in the regular settlement (CnC segment) which is investment in long term, shares you buy are credited to your demat account and debited from your demat account when you sell.
On the 'margin' trading you can buy shares (long) or sell them (shorting) intra-day i.e. all positions are squared off before 3.00 p.m. In the margin segment you can also buy &/or sell futures and options.
Futures are contracts for an underlying share (or index value) on a future date at a present price which may be at a discount or premium to the present value. For futures there is a margin deposited with the exchange via. the broker to cover this price and this varies with the reigning premium / discount so margin can be increased or decreased each day if the underlying moves.
Options are like shares of shares - a call option is a contract to buy the underlying share (or index value) at a fixed price on a future date. This contract is bought by paying a price much like a share price. For eg. you buy 50 Nifty 4700 Aug CE for Rs.70/-. This means you are buying 50 units of Nifty at (Rs.) 4700 for Rs. 70/- if the Nifty goes beyond 4700, say 4800 you will get the difference i.e. 4800-4700 = 100. If the Nifty stays below 4700 your option is worthless on the designated day i.e. the last Thursday of Aug 2009 and you would lose the Rs.70/- paid by you.
If you buy a put option say 50 Nifty 4700 Aug PE at Rs.70/-. If the Nifty goes below 4700, say to 4600 you get 4700 - 4600 = 100. If the Nifty goes above 4700 your Put option becomes worthless.
The price of put and call options varies throughout the day and from day to day depending on the current value of the underlying. So if you buy a 4700 call option for Rs.70/- when the present value is 4500
and the underlying value goes up to 4600, you might get Rs. 100/- so you sell your call option and make a profit of Rs.30/- likewise if you buy a 4700/- put option for Rs. 70/- when the underlying is at 4600 and the index drops to 4500 the price of the puts goes up and you make a profit.
Futures and options are not credited or debited to your demat account but are shown seperately under 'outstanding position' in history tab.
Options trading is better as the losses are limited to the premium or price you pay while returns can be high. In futures the losses and profits can both be huge and theoritically unlimited. Remember though that both Options and Futures have a short life and expire on the stated date which may be at the end of the current month, end of the next month or the end of the month after the next. Prices of options are not always linear or proportional to the value of the underlying.
If you intend to start trading in F&O segment, first start maintaining a shadow portfolio in both cash segment (regular shares) as well as options. See how well you are able to predict and
time market movements. Only after you fine tune your skills by practicing for a few months should you get into options trading. Options trading is not for the faint hearted. Be prepared for losses, that too huge losses. Put in only as much money as you can comfortably afford to lose. After you master options you can consider futures trading as IMHO that is for real professionals.
The right way of doing F&O trading is to use the options and futures as a hedge against your cash scrips. i.e. if you buy X shares expecting them to go up but want to be safe, you buy put options of X shares so that if the price goes down, your loss is minimised.
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Originally Posted by ramki067 Hi,
I'm a newbie in this field, I would like to invest in mutual funds of around 6K/month, planning to invest 2K in 3 MFs. Can you guys suggest me which MFs should i opt for(yielding good results) as i would like to invest for around 10 years from now.
Thanks,
Ramki. |
There are as many kinds of Mutual funds as there are stars in the sky. If you have an opinion on the market or economy invest in MFs that seem to reflect your opinion. Do not go by the mumbo jumbo they give out in the brochures, look at the kind of shares the MF owns, if you like their portfolio buy the MF units. For a 10 year SIP most people would recommend a mix of large cap, mid cap and debt. talk to your bankers they are trained to do this investment advice and most of them are pretty good at it. Remember that past performance is not an indication of future returns.
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Originally Posted by prabhusati Hi Team,
Any feedback / inputs on this query? |
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Originally Posted by BaCkSeAtDrIVeR From the individual investor's POV, if it is unsecured, it is no different from a company deposit. I think company deposits have a higher interest. |
Debentures are normally secured by a lien on the company's assets. NCD would stand for Non-convertible debentures i.e. debentures that will not be converted into equity shares. Debentures are safer than company deposits as the holder of the debenture is a secured creditor while a depositor is an unsecured creditor.
Cheers,