Options Trading Tutorial: Free Education Video

Options are derivative instruments used for both hedging and speculative purposes. 

By definition an option is a legal contract in which the writer (seller) of the contract grants to the buyer, the right to purchase from or sell to the writer a designated instrument or a scrip at a specified price within a specified period of time. 

The right to purchase a specified stock is called the Call option, while the right to sell a specified stock is called Put option. 

There exist many option strategies (tactics), which involves different combination of Calls and Puts, for hedging as well as speculation. Some of such strategies are Bull Call Spread, Bear Call Spread, Call Backspread, Covered Call, The Collar etc.

The following Options Strategies Course is designed to show how options work as a tool for hedging positions and how they can be used for speculative purposes.

Century old tax benefits might end for U.S oil companies

American president, Barack Obama, urged congress to abolish $4 billion of annual oil and natural gas subsidies and shift those savings to research on clean-energy fuels. 

Last year, the three biggest U.S. oil companies took home more than $80 billion in profit and they can stand on their own now, said Mr. President. 

Ending such breaks would reduce the deficit by $41 billion over a decade, according to Obama’s budget for fiscal 2013.

Nalco (National Aluminium Co.) Stake Sale

Govt. of India is looking to sell 10 percent stake in the state run Aluminium producing company NALCO (National Aluminium Company Ltd.) which could fetch the govt. around Rs.1400 crores at the current market price of Rs 55. As part of divestment program the govt. recently concluded auction of ONGC shares and has also launched NBCC IPO. 

Japanese stock markets @ 52 week high

Japan's benchmark index Nikkei hit its highest closing level on Tuesday since a massive earthquake and tsunami triggered a radiation crisis on March 11 last year. The index rose 2.4%, or 236.91 points, to 10,255.15, while the broader Topix index also climbed 2.4% to 872.42.

The Nikkei has surged 21.3% so far this year in 2012 due to robust US economic data and easing programmes by global central banks.

But Japanese equities are still considered undervalued compared with their global peers. The Topix carries a 12-month forward price-to-book ratio of 0.98 compared with the S&P 500's 2.0.

Stock Market in a Nutshell: A Graphical Summary

Stocks and Stock Markets in one view

List of Top Stock Brokers in India

Indian Stock Markets have a come long way in past two decades in terms of governance, simplicity, security and participation. Now investors from all over the world are participating in Indian equities like never before. 

The participation of retail investors, though relatively low when compared to developed worlds, have also gone up significantly since past 20 years, thanks to the increasing income of urban India. Experts believe that equity investments in India should go up substantially higher from the current levels in next 10 years. 

This opportunity has given birth to thousands of stock brokers in India. Many domestic and international banks in India have started offering stock broking and DEMAT services via separate subsidiaries. 

The Coal Mining Scam in India

After 2G Scam of 2011, the fresh allegation for allocating valuable coal block to hundreds of private miners without auction has hit the UPA govt. even harder. As per leaked CAG report, the government of India has lost up to $210 billion or Rs.10.67 Lakh Crores in revenue by selling coal deposits too cheaply.

Opposition parties reacted with outrage in parliament on Thursday 22nd March 2012 to the report, which was leaked to a newspaper. The session was adjourned and the government said it would respond once it had verified the facts. BJP has demanded a CBI probe into the allotment of coal blocks and monitoring of the probe by a court.

Crude Oil Cess impact on Oil Companies

Higher international crude prices since the start of 2012 have kept the shares of oil producing companies specially Cairn, ONGC and Oil India, buoyant on the hope of better realization. But budget 2012 brought surprise for these companies and investors. 

The finance minister seemingly wanted a share of the pie. The cess on crude got increased from Rs 2,500 a tonne to Rs 4,500 a tonne. This effectively means a decline of $5 a barrel in crude oil realisation. While this will add Rs 7,500-8,000 crore to the government’s kitty, the cess will negatively impact earnings of companies like ONGC, OIL and Cairn. Deutsche Bank estimated the negative impact on earnings at 15 per cent for Oil India, nine per cent for ONGC and seven per cent for Cairn India.

Tax Savings on Infrastructure Bonds in India withdrawn in FY 2012 - 2013

In FY 2010 an additional deduction was introduced to encourage investors to save money into infrastructure bonds. Under this new scheme a person could invest upto Rs. 20,000 on which no tax will be imposed. The most important part of the entire action was this was an additional benefit as compared to the Rs 1 lakh investment limit under Section 80C. So in financial year 2010 people were able to save upto RS.1,20,000 without paying any income tax. The bonds had a lock in period of five years.

Income Tax Calculator 2012 - 2013

The personal Income tax slabs have been revised in budget 2012. Though the limits have been raised marginally, there will be more savings for people earning more than 8 lakh per annum.

• The basic Income tax exemption limit raised to Rs 2 lakh from Rs 1.8 lakh.
• Rs 2 lakh - 5 lakh taxed at 10%.
• Rs 5 Lakh - 10 lakh at 20%. Previous year band was 5 lakh  - 8 Lakh.
• Above Rs 10 lakh taxed at 30%.

India 2012 - 2013 GDP at 7.6 percent - Economic Survey

The Indian Government's 2102 economic survey has projected the economic growth at about 7.6% in the next fiscal 2012-13, up from 6.9% estimated in 2011-12 on the back of declining inflation and softening interest rate. It expects the economic growth to further improve to 8.6% in 2013-14.

The economic survey suggest that fiscal consolidation is likely to get back on track from 2012-13, when savings and capital formation will also begin to improve.

Indian WPI Inflation for Feb - 2012 at 6.95 Percent

Wholesale Price Index (WPI) went up by 6.95% in February against 6.55% in January because of sharp increase in food prices, especially vegetables and protein-based items.

WPI Inflation in February 2011 was at 9.54%.

Food inflation was 6.07% in February against - 0.52% in January. Food articles have 14.3% share in the WPI basket.

Prices of manufactured items, which has around 65% weight in the WPI index, went up by 5.75% YoY in February, as against 6.49% in the previous month.

Railway Budget - 2012: Highlights

Railway Minister Dinesh Trivedi has presented his first rail budget on 14th March. 


Following are some of the  crucial highlights of the Budget 2012.

• Recommendation of kakodkar Committee on Saftey to be implemented.

Market Cap to GDP Ratio: U.S Stock Markets Valuation Technique

Warren Buffett once said that the percentage of total market cap (TMC) to the United States GNP is probably the best measure of where valuations stand at any given moment.

In the past forty years U.S Stock Market history, the TMC to GNP ratio has varied within a very wide range. The ratio was lowest at 0.35 times in the previous deep recession of 1982, while the highest point was 1.48 during the tech bubble in 2000. As a rule of thumb we can broadly divide the market valuation in the five bands based on past records:

Warren Buffett Portfolio Performance History

Berkshire Hathaway performance history (1980 - 2012)

Warren Buffett, the oracle of Omaha, who turned the loss making textile company Berkshire Hathaway into the world's largest holding company, follows the value investing strategy of Benjamin Graham. 

Buffett prefers to acquire great companies trading at a discount to their intrinsic value, and  hold them for a very long time. He only invests in businesses that he understands.  Using simple investing strategies he has outperformed S&P 500 by wide margin. 

Below is the brief snapshot of returns generated by Berkshire Hathaway over 5 years, 10 years and since inception.

Buy Hindalco Industries

InvestorZclub is recommending a buy on dips on Hindalco Industries in the region of Rs.130 to 135 for 1 year target return of at least 30%. Some of strong reasons for the recommendation are:

1. Trading at discount to current year FY 2012 Book Value. The FY-12 book value for the stock is expected to be Rs.165 while FY-13 book value should be at least Rs.175. The PE ratio for the current year is around 12 times.

2. The European subsidiary - Novelis which is cash positive but reports loss on net level is selling its loss making foil business in three countries which could bring it to green next year provided aluminium prices are supportive.

Impact of China's Economic growth slowdown on India

The Chinese Premier Wen Jiabao recently stated that the government was targeting a growth of 7.5 per cent in 2012. The fears of chinese economic slowdown has been prevailing since past couple of years which is now becoming a reality. 

While there is no hard landing, the world has become accustomed to China growing at 10 percent per annum. So, any slowdown would have global impact. Also, as China is the largest importer of base metals (lead, zinc, aluminium, copper and nickel), the slowdown has made commodities market nervous. Most global commodity stocks like Alcoa, Rio Tinto, Tata Steel, Hindalco are down significantly in past one week or so.

Top 10 richest people in the world - 2012

List of top ten most richest people on Earth

Carlos Slim: Mexican business magnet with networth exceeding $69 billion.

Bill Gates: Networth - $61 billion, founder of Microsoft Corp.

Warren Buffett: $44 billion, founder of Berkshire Hathaway Inc.

Impact of 2012 Assembly Election On Stock Markets

Indian Stock Market witnessed volatile movements in the morning until the clear consensus emerged during noon that SP is going to come in UP with full majority. 

Initially when the markets opened at 9:15 A.M it went up based on a hope that Samajwadi Party might not get full majority and could pull in Congress to form the government in UP. But as the day progressed it became clear that SP would get full majority and won't require congress support. That made the Indian stock Markets very nervous and SENSEX fell more than 550 points from the highs of the day.

So what were the reasons for nervousness and what's the future?

Trading Idea: March 2012

Sell ONGC 320 Call at Rs 1.40 Premium

The recent auction of 5 percent govt's stake in ONGC has given very good trading opportunity. The floor price for the auction was set at Rs. 290 which was 3 percent higher than the 29th Feb closing price. As a result the response from institutional investors was muted and LIC had to step in to bail out the govt. 

Now since the auction is over and it is clearly visible that there is very little demand for the share beyond 290 - 300 levels, one can write 320 call of ONGC March expiry at the current market premium of Rs 1.40

Gordon Gekko Quotes - Wall Street Movie (1987 - 2010)

The iconic character Gordon Gekko played by Michael Douglas, who won Oscar for his role in Oliver Stone's Wall Street, has become so popular that FBI has hired Gordon Gekko aka Michael Douglas for Anti-Insider-Trading PSA. 

Following are some of the famous quotes by Mr. Gekko taken from his movies "Wall Street Part I & II"

“The mother of evil is speculation.”

“You are the Ninja Generation.  No income.  No job.  No assets.”

Bucks + Steroids = Leverage (Steroid Banking).

Is US Economy Recovering?

Most economists and equity analysts on Wall Street feel that the recovery flight is taking off. But here is the truth.....

FII Investments in India crosses $7 billion till Feb 2012

Foreign Institutional Investors (FIIs) have so far invested more than $7 billion in Indian Stock Markets till Feb 2012. More than $5 billion were pumped in the month of February alone. This is the highest monthly net investment by FIIs in equities since October 2010, where they had infused Rs 28,563 crore.

Market analysts attributed strong FII inflows to signs of an easing monetary policy and the subsequent impact of improved liquidity position. Analysts expects the positive trend to continue further, given that the liquidity conditions remain strong. Strong surge in FII inflows in 2012 so far has helped boost the equity markets which has jumped nearly 15% since January, as also the rupee.

ONGC stake sale cleared, auction to happen soon

ONGC disinvestment has been given nod by the Empowered Group of Ministers (EGoM) today for the 5% stake sale. The auction is expected to happen in a couple of days. The floor price for the auction is expected to be be disclosed in exchange notice. 

The ONGC stake sale is likely to fetch the exchequer around Rs 12,000 crore. The government is looking at various options to meet its disinvestment target which has been hit due to adverse market situation.

Auto Industry: What to expect in budget 2012?

The two word answer to the above question is undoubtedly "higher tax". It is alsmost certain that the finance minister will levy higher taxes on the auto sector. However, it’s the quantum that will determine what happens to the stocks. Excise duty hike of 2% on passanger cars is almost discounted in the stocks. However some analysts believe that it can be reverted back to pre crisis levels of 12%. 

Considering the huge losses that oil marketing companies are having on diesel fuel sales, it is very likely that we could see a flat levy on diesel cars to compensate for the benefits of low running cost. This would place both petrol and diesel variants on par with each other from a cost point of view. This could dampen the sales of diesel cars and utility vehicles going forward.

Which Sector to Invest in 2012

Please vote and tell us which sector(s) or Industry you are most bullish on and betting on to generate maximum return for your portfolio. 

You can also comment below to provide your justification for your choices. 

Please share this survey with your friends to get maximum response which will help all of us in understanding the mood of the nation. Best of luck...

Warren Buffett Letter to Shareholders 2011 - 2012 : PDF

Berkshire Hathaway Chairman, Mr. Buffett, sends an annual letter to all of its shareholders and he has been doing this every year since 1977. 

The letter is very informative and Warren Buffett don't forget to highlight his mistakes in the letter (if any), which is a part of a leadership style that has helped him build a company with 270,000 workers and draw crowds of more than 20,000 to hear him speak during annual general meeting. “A friend once asked me: If you’re so rich, why aren’t you smart?” Warren Buffett, said in a letter accompanying the 1996 annual report. 

If you are looking to read some or all of those letters then use the link to download them in PDF format:

Oil in not well - Nymex Crude tops $105

In the recent run up in stock markets all over the world there is something that bulls have completely ignored which is oil. Oil prices jumped to a nine-month high near $105 a barrel today in Asia after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the West Asian country's nuclear programme.


With Nymex crude topping $105 and brent crude crossing $120 per barrel, bulls in India at least are expected to run out of steam. Oil is a significant threat to Indian fiscal situation which is already under strain and that threat could halt the rally that we are seeing in Indian stock markets. Couple of points to consider:

Buy Adani Port and SEZ

After a pretty long gap InvestorZclub has come out with an investment idea. The reason for the gap has been continuous fall in risky assets and uncertainties in global markets in past 6 months. But sentiments are now much better and barring Greece, global economy is in a relatively better shape. It appears that even if markets falls it will not be very deep. Hence companies in promising sector, sound management and reasonable valuations can be bought at every dip.

One such company that fits all the above three criteria of InvestorZclub is Adani Ports and SEZ. Investors with a three-year perspective can consider exposure to company's stock which is currently ruling at a price of Rs.150 as on 17th Feb 2012. 

The company has taken advantage of the perennial capacity constraint in major ports to quickly build a premium clientele for itself. As a result, its volumes expanded a robust 27 per cent compounded annually in the last three years ending FY-11 as against a mere 3 per cent expansion managed by major ports. 

Sensex, Nifty gained for seventh straight week

Key benchmark indices gained for the seventh straight week to scale highest closing level in 28 weeks as latest government data showed that inflation in January eased to a 26-month low. Nifty continues to form higher highs throughout the week and finally closed above 5550 levels. 

Foreign institutional investors (FIIs) pumped in another 3500 crores during last week taking total for 2012 to 24,100 crores (till February), as per provisional data from the stock exchanges. The BSE benchmark Sensex was up by 540.70 points or 3.05% for the week to settle at 18289.35 levels. The NSE flagship Nifty ended at 5564.30 levels, up by 182.70 points or 3.40%. 

Bharti Airtel Research Report - 2012

Bharti Airtel, being the largest telecom company in India, is being tracked by almost all major broking and research houses in India. 

Following are some of the latest research reports covering the prospects of Bharti Airtel in immediate future.

Bharti Airtel Research Report by Motilal Oswal , Angel Broking,  Prabhudas Liladhar

One Up On Wall Street Notes ebook PDF

One up On wall Street

The New York Times best seller "one up on wall street by Peter Lynch" has sold millions of copies through out the world. Peter Lynch, the world's greatest and the most successful fund manager, was undoubtedly the best stock picker of his time. Anise C. Wallace of The New York Times says "Mr. Lynch investment record puts him in a league by himself ".

Any investor should pay heed to what Mr. Lynch has to say and this book is full of advises by Mr. Lynch himself. He has shared loads of his own personal experiences of stock picking during his tenure at Fidelity Magellan Fund, which is truly a priceless treasure for any equity investor. 

Stocks to avoid in 2012

Stock Markets globally has been on a tear away rally and has advanced around 20% in general in past 2 months. 

Indian stock markets also went up from the Nifty level of 4550 to 5600 since 20th Dec 2011. In this rally many stocks have either made 52 week high or are near their 52 week high. But there are some stocks which instead of going up are making fresh 52 week low. These stocks are usually in small cap category and has some kind of problem or the other. Hence retail investors should completely stay away from these stocks. 

The stocks which made fresh 52 week low as on Feb 17, 2012 are show below:

Income Tax Saving Options / Instruments in India : 2012

With financial year FY 2011 - 2012 ending soon, tax savings is usually a big headache. Where to invest, how much is the return and other questions boggles our mind. Hence InvestorZclub has compiled a list of instruments which would help you in knowing the products that can save you tax and generate good returns on your investments

Employee Provident Fund: EPF (80 C)

As pet IT Act 80C, EPF scheme offers a total yearly exemption of INR 1 lakh. In this fund, 10 % to 12 % of a person's basic salary gets deducted and the other 12 % is contributed by the employer.

Average returns: 9.5%

Maturity period: One can withdraw the entire amount in instances of leaving job, retirement after 58 years of age or taking VRS. Partial withdrawal can be done for home, medical related expenses.

List of Stock Market based Movies: Must Watch for Traders and Investors

I have seen lot of stock market based movies sometimes for learning and sometimes for the sheer adrenalin rush. I particularly like following movies and would recommend investors and traders to see them as they not only provide good learning but also boils your blood and keep you on which is very essential in stock markets.

Margin Call (2011) : A taut, sinewy drama set in a Wall Street investment bank. 

Wall Street (1987) : The classic Wall street film. You will love Michael Douglas' character Gordan Gekko

Warren Buffett Biography PDF

Warren Buffett, the world's richest investor turned philanthropist, has turned the ailing textile business of Berkshire Hathaway into a multi billion dollar furniture to Insurance giant after acquiring it in 1965. 

At the age of six, Buffett purchased 6-packs of Coca Cola from his grandfather's grocery store for twenty five cents and resold each of the bottles for a nickel, pocketing a five cent profit. While other children his age were playing hopscotch and jacks, Warren was making money. Its very encouraging to see that buffett who used to sell coca cola on trolley at the age of Six is now the owner of Coca Cola. He is the largest shareholder of the company as on FEB 2012. 

Tips to succeed in equity investing: 4 Mantras to remember

We all know that the way to make returns higher than inflation is to invest in equities directly or indirectly. This helps investor grow their capital much faster and will help beat inflation inspite of sharp periods of decline. Direct equity investment involves buying and holding of shares of stock on a stock market by individuals and funds in anticipation of income from dividends and capital gain as the value of the stock rises.

If one remembers following points while investing in equities the chances of doing blunders reduces substantially.

ONGC Q3 FY 2011 - 2012 Result Analysis

Oil and Natural Gas Corporation (ONGC), India's largest oil and gas exploration company, reported a 4.8% decline in net profit at Rs 6,741 crore for the quarter ended December 2011 as against Rs 7,083 crore in December 2010.

Net sales too fell 2.5% to Rs 18,123 crore from Rs 18,586 crore in the same period a year ago. ONGC also reported a royalty reversal of Rs 3,142 crore as against an expectation of Rs 2,500 crore.

Bharti Airtel Q3 FY 2011 - 2012 Result Analysis

Bharti Airtel, India's largest telecom service provider, grew its revenues by 7% to Rs 18,477 crore in Q3 of current fiscal over the September 2011 (Q2) quarter. Its earnings before interest, tax, depreciation and amortization grew 2.5% sequentially while net profit declined by 16.6% y-o-y and 1.5% q-o-q to Rs 1,011.3 crore. Bharti’s third quarter performance shows that while it has managed to grow revenues, maintaining profitability is increasingly becoming a challenge.

Bharti reported a higher than expected SG&A of Rs 3,465 crore compared to estimates of Rs 3,116.7 crore. The impact of this higher SG&A spend has hurt the bottom line by Rs 235 crore. The company’s EBITDA margins too have contracted sequentially from 33.6% in Q2 to 32.2% in Q3.

Bharti’s ARPM rose to Rs 0.446 compared with Rs 0.436 a quarter earlier. Consequently, the company’s ARPU (average revenue per user) improved by Rs 4 sequentially to Rs 187 during the quarter.

India's Per Capita Income (GDP) at Rs 53k in 2010 - 2011

India’s per capita income grew by 15.6 per cent to Rs 53,331 per annum in 2010-11, crossing the half-a-lakh rupees mark for the first time, according to government data. 


The per capita income at current prices is estimated at Rs 53,331 in 2010 - 11, as against Rs 46,117 for the previous year, depicting a growth of 15.6 per cent, as per Central Statistical Office (CSO).