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Facts About Industry----
•Number of telecom (mobile and landlines) subscribers: ~875 million (as on 31.5.11)
•Number of cellular (GSM, CDMA and WLL-Fixed) subscribers: ~840 m (as on 31.5.11)
•Number of GSM cellular subscribers: 599 m (as on 30.6.11)
•Number of CDMA cellular subscribers: 155 m (as on 31.12.09)
•Total revenues of telecom service providers (2005-06): Rs. 880 bn
•Telecom equipment production (2007-08): Rs. 954 bn
•Mobile handset market (2009): estimate Rs. 300 bn
Bharti AirTel took a lead in the numbers as Service Provider’s net share in total additions in April 2010 with 17.75 percent. AirTel is followed by Vodafone, Reliance and Tata with 17.15%, 16.17 & 11.49% share respectively.
However, with overall market share as on April 30, 2010 the top players are AirTel ( 21.73% ), Reliance (17.49%), Vodafone (17.26%), BSNL (11.75%).
SWOT ANALYSIS: BHARTI AIRTEL
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· Largest cellular service provider in India
· Supplies broadband and telephone services - as well as many other telecommunications services to both domestic and corporate customers.
· Strategic alliance with Sony-Ericsson, Nokia - and Sing Tel thus access to knowledge and technology from other parts of the telecommunications world.
· Entire Nation Coverage with its network
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· Dependence on Outsourcing due to less exposure to working of telecom industry
· Did not own its own towers, in comparison to particular strength of some of its competitors such as Hutchison Essar
· May fall short in funds/ liquidity due to investment deal with South Africa's MTN
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· Vast network coverage- Airtel plans to cover 1,500 cities across 13 circles by the end of March 2012
· Tie-Ups with Giants-Tie-up with Google can only enhance the Airtel brand, and also provides advertising opportunities in Indian for Google.
· Strategic Global Partnerships----The new iPhone will be launched in India via an Airtel distributorship. Another strategic partnership is held with BlackBerry Wireless Solutions.
· Using its 'Matchbox' strategy for reaching micro consumers
· Joint venture with Vodafone Essar and Idea Cellular to create a new independent tower company called Indus Towers
· IPTV is another potential new service
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· Target for the takeover vision of other global telecommunications players
· Competetion from reliance and MTN in overseas investment
The Greeks : Delta, Gamma , Theta, Vega and Rho
Delta : delta measures the sensitivity of the option value to changing stock price. Delta of any option gives an idea about the number of unit of a stock that should be held by any investor for creating a riskless hedge.
Gamma : the gamma of any option is rate of the change of the option s delta with respect to the price of the underlying stock.
Theta : Theta measure the option respect of change in expiration time . if stock price and other factors of the option pricings constant model are constant .
Rho : Rho can be measure of the sensitivity of option value to change in interest rates .
Vega : vega measures the sensitivity of the option premium with respect to the volatility of the asset .
Factors influencing the option price
Current stock price (spot price), Strike price, Time to expiration ,Volatility , Risk free rate and Dividend
Current stock price (spot price) : value of call option increase with increasing the stock price . while its value decreases whenever the stock price declines value of put option increase with decrease in stock price . while it value in decrease with increase in stock price.
Strike price : call option increase with decrease in strike price and decrease when increase in strike price vice versa with put
Time to expiration : call and put both are decrease phase with time
Volatility : call and put both value are increased with increasing in volatility
Risk free rate : value of call option increased with increasing in risk free rate. Value of put option decrease with increase in risk free rate
| | Change | Call | Put |
| Price of underlying assets | Increase | Increase | Decrease |
| | Decrease | Decrease | Increase |
| Volatility | Increase | Increase | Increase |
| | Decrease | Decrease | Decrease |
| Time | Decrease | Decrease | Decrease |
Option strategies :
(1)Bull and Bear spread : A bull spread is a combination of options created to profit from a rise In price of the underlying assets.
A bear spread spread is a combination of options created to profit from a fall In price of the underlying assets.
Long bull spread : buy lower, sell higher ………buy 4900 put sell 5300put ,buy call 4900,sell 5300 call
Risk exposure limited, Limited profit potential ,Trend are clear in future ,call and put both are use
(2)Box spread: A box spread is a combination of bull and bear spread with call and put respectively with same strike price
Long call at lower strike price , short call at higher strike price
Long put at higher strike price , short put at power strike price
If you are a risk adverse investor there you can adopt this strategy since this always gives a pay off the difference between the higher and lower strike price
Two call and two put are use , same strike price
Condor spread : A condor spread strategy involving four option of the same type but with a small difference
Two option are bought with lower and higher strike price sell two option with intermediate strike price
Limited loss and limited profit , call and put both are use , trend are not clear
Calender spread : it is created by selling a call option with a certain strike price and buying another call option with long maturity but the same strike price .
Butterfly spread : A butterfly spread can be executed by using four identical option with the same expiration date and on the same underlying stock but different strike price
Buy lower and higher strike price , sell two intermediate strike price
Direction are not clear , use both call and put and long and short both strategy
Straddle : straddle involves buying call and put with the same strike price
Limited risk ,limited loss , profit upside unlimited , downside limited, direction not clear.
Strangle : combination of call and put with same expiration date and different strike price
Buying call higher strike price , buying put lower strike price
increasing in stock price as likely as it decrease.
Strips : a strips consists of long position in one call and two put the same strike price and expiration date
Volatile stock , buyer belive that stock price will be big move but price is more likely fall than rise.
Straps : buying two call and sell one put same strike price and expiration date
Stock is more likely rise than fall , volatile stock
Generation of strike for stock options
| Price of underlying | Strike price interval | Scheme of strikes to be introduced (ITM-ATM-OTM) |
| Less than or equal to 50 | 2.5 | 5-1-5 |
| >50-100 | 5 | 5-1-5 |
| >100-250 | 10 | 5-1-5 |
| >250-500 | 20 | 5-1-5 |
| >500-1000 | 20 | 10-1-10 |
| >1000 | 50 | 10-1-10 |
Generation of strike for index options
| Index level | Strike interval | Scheme of strike to be introduced (ITM-ATM-OTM) |
| Up to 200 | 50 | 4-1-4 |
| From 2001 to 4000 | 100 | 6-1-6 |
| From 4001 to 6000 | 100 | 6-1-6 |
| >6000 | 100 | 7-1-7 |
Option market instruments :
(1) Index based option
(2) stock based option
Contract specification for index option : on Nse index options market are one –month, two month and three month expiry contracts with minimum nine different strikes available for trading. Hence , if there are three serial month contracts available and the scheme of strikes 6-1-6 , then there are minium 3*13*2 (call and put option) i.e. 78 option contracts available on an index . option contracts are specified as follows : DATE- EXPIRYMONTH-YEAR-CALL/PUT-AMERICAN/EUROPEAN-STRIKE.
Contract specification of S&P CNX Nifty options
| Underlying index | S&P CNX NIFTY |
| Exchange of trading | National stock exchange of india limited |
| Security descriptor | OPTIDX |
| Contract size | Permitted lot size shall be 50 (minimum value 2 lakh) |
| Price steps | 0.05 |
| Price band | A contract specific price range based on its delta value and is computed and update on a daily basis. |
| Trading cycle | Three month trading cycle – the near month (one), the next month (two)and the far month (three) |
| Expiry date | The last Thursdays of the expiry month or the previous trading day if the last Thursday is a trading holidays. |
| Settlement basis | Cash settlement on T+1 basis. |
| Style of option | European |
| Strike price interval | Depending on the index level |
| Daily settlement price | Not applicable |
| Final settlement | Closing value of the index on the last trading day. |
| | |
Contract specification of stock options
| Underlying stock | Individual securities available for trading in cash market |
| Exchange of trading | National stock exchange of india limited |
| Security descriptor | OPTSTK |
| Contract size | As specified by the exchange (minimum value 2 lakh) |
| Price steps | 0.05 |
| Price band | Not applicable |
| Trading cycle | Three month trading cycle – the near month (one), the next month (two)and the far month (three) |
| Expiry date | The last Thursdays of the expiry month or the previous trading day if the last Thursday is a trading holidays. |
| Settlement basis | Cash settlement on T+1 basis. |
| Style of option | European |
| Strike price interval | Depending on the index level |
| Daily settlement price | Premium value |
| Final settlement | Closing value of underlying on exercise day. |
| | |
New contract will be introduced on the next trading day following the expiry of near month
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