Meet Ajay & Ashish
Ajay believes, the shares of ABC Mobiles, currently priced at Rs. 300, is going to rise. Ashish, who owns some shares of ABC Mobiles is expecting the price to fall.
So, Ashish agrees to sell his shares to Ajay for Rs.320 each in a month’s time. They sign the contract of call option, by which Ajay gains the right to buy and Ashish becomes obligated to sell the shares at the agreed price on the set date.
The fee that Ajay pays Ashish for the option, called premium is Rs.20 per share.
If the share price shoots up to Rs.400 in a month Ajay can use the option and earn a profit of Rs.60 after deducting the Rs.20 he had paid as premium.
If the price stays lower than Rs.320, then Ajay loses the Rs.20 he paid for the option.
Call options are for investors, waiting to leverage their capital for greater investment returns.
Start leveraging capital gains by Opening Demat Account in India with Angel Broking.
What is a bonus issue prime interest I’ll being created at six hundred rupees and the company has recently declared a to is to one bonus issue Amit owns a few shares of prime infra but doesn’t understand what’s in it for him so his friend Vinod a seasoned investor with Angel Broking explained the two insta want bonus issue means you will get two three shares for every one shed that you own with 100 shares of prime infra Amit will now get an additional 200 shares taking his total took 300 shares but because the number of shares has tripled the price of each share is now one third of the previous value since each prime infra 600 rupees before the bonus issue it will now be two hundred rupees though the number of shares on it owns has increased from 100 to 300 the total value of his investment remains the same so why did Prime infra issue bonus shares to reward the investors and gain their confidence as well as attract new investors on it now understands what a bonus issue is.
He is an active trader at Angel Broking and has built a sizable portfolio in the past few years.
He smartly makes use of a facility Called Margin Funding to continue his investments in the share market.
Whenever he falls short of funds to buy shares, he calls his dealer at Angel Broking to provide him with the shortfall amount.
His dealer instantly facilitates the amount to his account so that he can complete the transaction
This is a short term loan facility that Ashish gets from Angel Broking at an agreed rate of interest.
By making use of this facility, Ashish can buy shares even if he does not have the entire amount to pay for the transaction.
Like him, you too can make the most of this facility and increase the probability of making profits.
what is stock split Samir owns 100 shares of z corporation valued at 500 rupees per share his total investment is thus 15 thousand rupees he has just heard that said corporation has decided to go for a stock split so he asked his friend Vinod a seasoned investor with Angel Broking to explain Zant corporation has decided to increase its number of shares by issuing more shares to current shareholders some here gets one additional share for every share that he already owns this is a one-for-one stock split but the price of each share is now half of the previous value that is 500 divided by 2 equal to 250 rupees so though the number of shares Samir owns has increased from 100 to 200 the total value of his investment remains the same that is 250 rupees into 200 shares why do companies split their stock to make their shares more affordable to small investors also the lower share price makes the stock more liquid that is easier to buy and sell remember the company’s market capitalization that is the total value of all its outstanding shares remains the same even after the split thanks to Vinod Samir now understands what stock split is all about.
what is intraday trading amid and shirac both trained in the equity share market while Amit is an average trader with Angel Broking Chirag is a beginner and wants to know about intraday trading Amit explained intraday trading implies buying and selling securities on the same day every day the price of a security say ABC Corp fluctuates and intraday trader profits from this rise or drop of price which offers huge returns intraday traders also get the benefit of margin funding whereby they can do transactions of up to ten times their account value which boosts their gains intraday trading poses a risk of loss but there are measures to limit losses whenever I may the trades intraday he monitors the market closely and seeks advice from Angel Broking team of experts he also opts for stop loss which limits his losses to a minimum if any like Amit Chirag is now ready to trade intraday with Angel Broking.
Rajat is new to share market investments & wants to know more about derivatives.
Derivative, is a contract between two or more people that entails speculating on the price of a certain underlying asset on a future date. Know more about What are Equity Derivatives?
Let’s say, Rajat feels, the shares of Zen Infra, currently priced at Rs. 100 is set to rise considerably in 1 month. However, Amit, who owns some shares of Zen Infra, is expecting the price to fall.
So, Rajat & Amit enter into a contract by which Rajat has to buy & Amit has to sell the Zen Infra shares at an agreed price of say Rs. 110 after 30 days, irrespective of the market-price.
The contract between Rajat & Amit is a derivative. It allows Rajat to make profit by speculating and provides Amit protection from incurring heavy losses.
Futures and options are two common types of derivatives.
Amit owns some shares of Z Corp, currently priced at Rs. 300. He is afraid their prices might fall. Another investor, Vinod, thinks Z Corp shares are stable & fairly priced.
So, Amit & Vinod sign the contract of “Put-Option”, by which Amit gains the right to sell & Vinod becomes obligated to buy the Z Corp shares in a month’s time at an agreed price of Rs. 300 irrespective of the market price.
To exercise this option Amit pays Vinod, a fee or premium of Rs.2 per share.
If Z Corp shares fall, below Rs.300, Amit can use the put option & sell his shares to Vinod at Rs.300 & limit his losses.
If the price rises, Amit can sell the shares at the market price & recover the premium he paid for the put option.