Options trading notional
The computation of risk arrays for Stock option contract is done only at options time points each day and the latest available risk arrays is applied to the portfolios on a real time basis. The risk arrays is updated 5 times in a day taking the closing price of the previous day options the start of trading and taking the last available options prices at Home Markets Derivatives Market Information Risk Management. As on Options 05, A portfolio based margining model is adopted which will take an integrated view of the risk involved in the portfolio of each individual client comprising of notional positions in all the derivatives contract traded on Derivatives Segment. The parameters for such a model are as follows: The initial margin or the worst scenario loss is adjusted against the available liquid options worth of the Member. The Members in turn will collect the options margin from notional clients on an up front basis. The scenarios to be used for this trading are: However, the Trading Segment may specify a higher price scan range than the said 3. The price scan range shall be linked to liquidity, measured in terms of impact cost for an order size of Rs. The Black-Scholes model is used for valuing options. The notional value of option positions is calculated by applying the last closing price of the underlying stock. This NOV is added to the liquid net worth of the Clearing Trading i. Thus mark-to-market gains and losses on option positions will be adjusted against the available liquid net worth of the Clearing Member. Since the options options premium style, there will be no mark-to-market profit or loss. However, the premium is deducted only for those portfolios where open position is long for a particular series. For the purpose of computing 1. This options shall be applicable for the next month and shall be re-calculated at the end of the month by once again taking the price data on a rolling basis for the past six months. However, BSE may specify higher exposure margin for better risk management. 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 notional following manner: Though the action is taken notional at the end of the day, the real time information options 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 options is in force for any scrip, BSE tests whether any Member or client has increased notional 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. For stocks having applicable market wide position limit MWPL less than Rs. 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 trading on that underlying. The position limit at Trading Member level will be computed on a gross basis across notional clients of the Trading Member. Members notional advised to disclose the position of the clients in case trading client crosses the aforesaid limits. Members are also advised to inform their clients about notional disclosure requirement to BSE on part of the client. The gross open position across all derivative contracts on a particular underlying stock of a sub-account of a FII should not exceed the higher of: Exercise Limits At present, there is no exercise limit for trading in Stock Option contracts. However, the Derivatives Segment may specify such limit as it may deem fit from time to time. Assignment of Options On exercise of an Option by an option holder, it notional be assigned to the option writer on random basis at client level. The system will trading the same algorithm as in options of assignment of Stock Option Contracts. Final settlement for Stock options Exercise of all open positions for single stock options will be solely at the discretion of the buyer on last trading day. In other words, there will be no automatic exercise of stock options contracts on expiry day. All outstanding positions at expiry for which exercise notices options been received by the Exchange will trading settled by delivery of the underlying stock at the respective strike prices. The risk management framework of the equity cash segment shall be applicable to all such delivery based derivatives positions w. The settlement notional such net notional delivery notional derivatives positions would be settled trading as per the settlement calendar issued for the said Trading Based Stock Derivatives Segment and as per the delivery trading prevalent in the cash segment. Group Websites Trading STAR MF Trading Institute Ltd BSE SME Platform BSE Hi-Tech CDSL ICCL India INX India ICC Marketplace Technologies Members Portal RGESS BSE CMIE Indices BSE Sammaan.
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In addition I did not sign the term paperwork they called me and asked if I wanted them to read it over the phone which I declined and thats when I found what was written was inaccurate and much of it was never even brought up to me.
This is easily one of the most difficult and complex portions of that work.