How is a Stock Market Index Constituted
Note: The explanation below is based the basis of inclusion of stocks in the BSE Sensex and the Nifty 50. Composition of a stock market index such as the S&P BSE Sensex (“Sensex”), S&P Nifty 50 (“Nifty”), the Bank Nifty etc is not constant. You must have come across a news item like – “NMDC and IndusInd […]
Making Money in Stocks is Not for Everyone
Over the last few weeks a lot of people have approached me for help with their stock investments. I will take two popular questions today. I. Should I invest directly in stocks or should I invest in mutual funds? II. Is it possible to invest money in the stock market in a safe, risk free […]
Strap Option Strategy
When to use: Strap option strategy is used when the investor is bullish on the stock and expects volatility in the near future. How it works: Strap option strategy uses three option contracts of the same underlying stock, with the same expiry date and same strike prices. In this strategy, you buy 2 at-the-money call options and 1 at-the-money put option, each […]
Short Put Ladder Option Strategy
When to use: Short Put Ladder Option Strategy is used when the investor is neutral to bullish on the stock and expects significant volatility. How it works: In the short put ladder strategy you sell 1 in-the-money put option; buy 1 at-the-money put option and buy 1 out-of-the-money put option of the same underlying stock with the same expiry date. You believe that the market will […]
Short Call Ladder Option Strategy
When to use: Short Call Ladder Strategy is used when the investor is moderately bullish on the stock and expects significant volatility. How it works: In the short call ladder strategy you sell 1 in-the-money call option; buy 1 at-the-money call option and buy 1 out-of-the-money call option of the same underlying stock with the same expiry date. You believe that the market will be […]
Strip Option Strategy
When to use: Strip Option Strategy is used when the investor is bearish on the stock and expects volatility in the near future. How it works: Strip option strategy use three option contracts of the same underlying stock, with the same expiry date and same strike prices. In this strategy, you buy 2 at-the-money put options and 1 at-the-money call option. For […]
5 Things to Look For In Identifying Multibagger Stocks
I am not quite sure of what the term means or where it originated but there is a long and illustrious list of investors who made a fortune by investing in multibagger Stocks. On my part, I have read the investment philosophy of many of those investors to understand how they go about picking stocks. Below […]
SEBI Regulations for Investment Advisers and Research Analysts
Analysts or investment advisers are experts or at the least understand the markets a little more, given that they spend a lot of time reading and researching about stocks. People often rely on their advice, hoping that they have the most accurate information about the company/securities which they are covering. While this may or may […]
Investing in IPOs – Valuation or the Share Price?
Lately, I have been getting some questions on investing in IPOs. This morning, it just occurred to me that despite working on IPOs and drafting offer documents for 5 years of my life, I have not written a single post about it. Just goes to show how much you ignore things that you know the […]
Debt Securitization Process in India
How many times have you heard something like this – The company plans to expand its operations by debt securitization or by securitization of (proceeds of) certain of its assets, or simply by securitization. In this write up, I will try to explain very briefly about what this means and how it works in practice. Debt Securitization […]