Bse futures and options trading
What is the objective of the Initial Margin? What is Variation or Mark-to-Market Margin? What is the concept of Basis? What are the profits and losses in case of a Futures position? What happens to the profit or loss due to daily settlement? How does the Initial Margin affect the above profit or loss? What is a spread position? Contracted Price of Futures. What are Stock Index Options? What are the uses of Index Options? Who would use Index Options?
What are Options on individual stocks? Which are the stocks on which options are available? What is the market lot size of different stock option contracts? How will introduction of options in specific stocks benefit an investor? Whether the holders of equity options contracts have all the rights that the owners of equity shares have? What is Over the Counter Options? Where can I trade in Options and Futures contracts? What will be the new margining system in the case of Options and futures?
How will the assignment of options take place? The settlement of such net outstanding delivery based derivatives positions would be settled separately as per the settlement calendar issued for the said Delivery Based Stock Derivatives Segment and as per the delivery mechanism prevalent in the cash segment. Position Limits a Market Level A market wide limit on the open position in terms of the number of underlying stock on stock options and futures contract of a particular underlying stock is: The limit would be applicable on all open positions in all futures and option contracts on a particular underlying stock.
The Market Wide limit is enforced in the following manner: Though the action is taken only at the end of the day, the real time information about the market wide-open interest as a percentage of the market wide position limits is disclosed to the market participants.
At the end of each day during which the ban on fresh positions is in force for any scrip, BSE tests whether any member or client has increased his existing positions, or has created a new position in that scrip. The penalty is recovered along with the Mark-to-Market on the next day. Once a Member reaches the position limit in a particular underlying, he is permitted to take only offsetting positions which results in lowering the open position of the member in derivative contracts on that underlying.
The position limit at trading Member level is computed on a gross basis across all clients of the trading Member. The position is applicable on the combined positions in all derivatives contracts on an underlying stock. Members are advised to disclose the position of the clients in case the client crosses the aforesaid limits.
Members are also advised to inform their clients about the disclosure requirement to BSE on part of the client.