An advanced options strategy with three legs and four total options is called a long butterfly spread with calls. One call is purchased at strike price A, two calls are sold at strike price B, and one call is subsequently purchased at strike price C. The set up results from an investor linking the beginning of a short call spread with the end of a long call spread at strike price B.
An investor who opens this position is making a wager that the stock will pin or almost pin at strike price B. The investor would keep the profits from option A if the stock did really pin at the short strikes, but options B and C would expire worthless.
Although it can be difficult to secure that pinning strike, this method has a modest entrance cost, which means decreased risk if things go south. The long butterfly spread works well in low-volatility situations where there is a good chance that the price will pin. Due to its limited loss, it can also be a wise decision in volatile markets, but traders should watch the trade carefully and exit it as the stock goes near the short strikes.
Profit/Loss
The difference between the lowest and middle strike prices is subtracted from the cost of the trade to determine the maximum profit. For instance, the maximum profit would be Rs 4.30 if the distance between points A and B were Rs 5 and the deal cost Rs 0.70.
The maximum loss would be equal to the cost of the deal, or Rs 0.70 in the same scenario.
Breakeven
There are two points where things break even. By taking the lower strike price (point A) and adding the trade’s cost, one can get the lower breakeven point. So, if transaction cost Rs 0.70 and point A had a strike price of 100, the lower breakeven would be Rs 100.70.
The highest strike price (point C) would be used to determine the higher breakeven point, and the net debit would be subtracted. Therefore, our higher breakeven would be Rs 109.30 if the point C strike price was Rs 110 and the transaction cost was Rs 0.70.
Example
A trader might execute a 100/105/110 butterfly spread by purchasing one call with a strike price of 100, selling two calls with a strike price of 105, and purchasing one call with a strike price of 110 at the prices listed below:
Purchase one (Rs 5.00) XYZ 100-strike price call.
For Rs 5.40 (Rs 2.70 each), sell two XYZ 105-strike price calls.
Purchase 1 110-strike price call for XYZ for Rs 1.10.
Cost in whole is Rs 0.70 debit.
The investor will have lost the full Rs 0.70 if the stock declines during the next 45 days, and all positions will expire worthless and be taken out of the account.
The trader will profit Rs 5 if the stock moves up slightly to Rs 105 at expiration, capitalising on the 100-strike price option while the other options expire worthless. Their net gain would be Rs 4.30 because they spent Rs 0.70 on the trade.
The investor would profit Rs 10 on the 100 call if the stock reached a price of Rs 110. The 110 call expired worthless, resulting in a loss of Rs 10 (Rs 5 X 2 losses on the short middle 105-calls). The investor paid Rs 0.70 for the trade, therefore their net loss is Rs 0.70. The final result would be Rs 10 – Rs 10, meaning all profits are lost.
Conclusion
A butterfly spread with calls becomes more bullish and less expensive to trade the higher the strike prices are set by the trader. However, the likelihood of winning decreases when strike prices are raised.
The implied volatility is sensitive to variations in this kind of spread. Inversely correlated with changes in implied volatility is the spread’s net price, which decreases when implied volatility increases and rises when implied volatility decreases. The trader who places this order hopes implied volatility would decrease.
The long butterfly spread with calls is a technique that should only be used by seasoned options traders.
An advanced options strategy with three legs and four total options is called a long butterfly spread with puts. One put is purchased at strike price A, two puts are sold at strike price B, and one put is then purchased at strike price C. The setup results from an investor combining the beginning of a short put spread with the end of a long put spread at strike price B.
An investor who opens this position is making a wager that the stock will pin or almost pin at strike price B. The investor would keep the profits from option C if the stock did really pin at the short strikes, but options B and A would expire worthless.
Although it can be difficult to secure that pinning strike, this method has a modest entrance cost, which means decreased risk if things go south. In low-volatility situations where there is a strong likelihood of price pinning, the long butterfly spread with puts is a suitable option. Due to its limited loss, it can also be a wise decision in volatile markets, but traders should watch the trade carefully and exit it as the stock goes near the short strikes.
Profit/Loss
The difference between the higher strike price and the middle strike price is subtracted from the cost of the trade to determine the maximum profit. For instance, the maximum profit would be Rs 4.30 if the distance between points C and B were Rs 5 and the deal cost Rs 0.70.
The maximum loss would be equal to the cost of the deal, or Rs 0.70 in the same scenario.
Breakeven
There are two points where things break even. The highest strike price (point C) would be used to determine the upper breakeven threshold, and the cost of the trade would be subtracted. Therefore, the lower breakeven would be Rs 109.30 if point C had an option with a strike price of 110 and the trade cost Rs 0.70.
By adding the net debit to the lowest strike price (point A), the lower breakeven point can be determined. Therefore, our lower breakeven would be Rs 100.70 if the point A strike price was equal to Rs 100 and the trade’s cost was Rs 0.70.
Example
A trader might execute a 100/105/110 butterfly spread with options if XYZ is trading at Rs 107 and it is anticipated that it will trade flat to slightly lower over the next 45 days by purchasing one 110-strike price put, selling two 105-strike price puts, and purchasing one 100-strike price put for the following prices:
The investor will have lost the full Rs 0.70 and all positions will expire worthless and be deleted from the account if the stock trades higher than Rs 110 over the next 45 days.
The trader will profit Rs 5 from the market movement, utilising the 110-strike price option, while the remaining options expire worthless if the stock trades somewhat lower to Rs 105 at expiration. Their net gain would be Rs 4.30 because they spent Rs 0.70 on the trade.
The investor would profit Rs 10 on the 110 put if the stock fell to Rs 100. The 100 put lost all of its value, and you lost Rs 5 X 2 on the short middle 105-puts for a total loss of Rs 10. The investor paid Rs 0.70 for the trade, therefore their net loss is Rs 0.70. The final result would be Rs 10 – Rs 10, meaning all profits are lost.
Conclusion
The more bearish a butterfly spread with puts becomes, while also lowering the cost of the transaction, the lower the trader sets the strike prices. However, the likelihood of success decreases when strike prices are lowered.
The implied volatility is sensitive to variations in this kind of spread. Inversely correlated with changes in implied volatility is the spread’s net price, which decreases when implied volatility increases and rises when implied volatility decreases. The trader who places this order hopes implied volatility would decrease.
A seasoned options trader should use the long butterfly spread with puts instead of a newbie.
An advanced options strategy known as an iron butterfly spread has three legs and four total choices. Joining a bull put spread with a bear call spread at strike price B constitutes the transaction. An iron butterfly can also be viewed as an iron condor, with the difference being that the short strikes, for both calls and puts, are at the same strike price as opposed to being spread apart. The investor is short both the put and the call spread, therefore the trade is set up for a total net credit.
An investor who opens this position is making a wager that the stock will pin or almost pin at strike price B. All of the options would expire worthless and the investor would keep the whole premium amount if the stock did pin at the short strikes.
The stock’s position in relation to the short strikes at the time the trade is opened can make it slightly bullish or bearish, however generally speaking this trade is a natural direction approach. If the stock is trading below strike price B, it is bullish; if it is trading above strike price B, it is bearish.
Profit/Loss
The maximum profit would be equal to the credit obtained for opening the trade, or Rs 3.40 in this example. This profit would be realised if the stock remained at the short strike prices on the expiration date.
The difference between the lower strike price and the intermediate strike price is subtracted from the credit of the trade to determine the maximum loss. For instance, the maximum loss would be Rs 1.60 if the distance between points A and B was Rs 5 and the premium received was Rs 3.40.
Breakeven
There are two points where things break even. By adding the premium obtained for the trade to the short strike price (point B), the higher breakeven point can be determined. Therefore, the higher breakeven would be Rs 103.40 if point B had a 100-strike price option and the credit earned was Rs 3.40.
By subtracting the premium earned for the trade from the short strike price (point B), one can determine the lower breakeven point. Because of this, if point B represented a 100-strike price option and the credit received was Rs 3.40, the lower breakeven would be Rs 96.60.
Example
A trader could execute a 95/100/105 iron butterfly spread by purchasing one 95-strike price put, selling one 100-strike price put, purchasing one 105-strike price call, and XYZ is trading at Rs 100 and is predicted to trade sideways over the next 45 days.
For Rs 0.50, purchase 1 XYZ 95-strike price put.
For Rs 2.20, sell 1 XYZ 100-strike price put.
For Rs 2.20, sell 1 XYZ 100-strike price call.
Purchase 1 105-strike price call for XYZ for Rs 0.50.
Total premium equals Rs 3.40 in credit.
The investor will keep the Rs 3.40 credit if the stock reaches Rs 100 at expiration, but all positions will expire worthless and be deleted from the account.
The trader will lose Rs 5 on the short 100 put if the stock moves lower than Rs 95 at expiration, while all other options expire worthless. The trader’s net loss would be Rs 1.60 because they were given a credit of Rs 3.40.
The investor would lose Rs 2 on the 100-strike call if the stock reached Rs 102 and all other options would expire worthless. The trader’s net profit would be Rs 1.40 because they were given a credit of Rs 3.40.
Conclusion
The implied volatility is sensitive to variations in this kind of spread. When implied volatility grows, the spread’s net price rises, and when implied volatility declines, the price lowers. The trader who places this order hopes that implied volatility will decline since it will enable them to repurchase the trade at a lower cost.
This transaction is frequently made just before earnings, when implied volatility is high. Once the earnings report is released and implied volatility decreases, the spread’s value decreases, allowing the investor to repurchase it at a lower price. However, if there is a sizable earnings gap, a huge price fluctuation might quickly turn this strategy into a loser. Due to its great profitability and low risk, it is a preferred investment among traders.
The iron butterfly spread is a strategy for seasoned options traders only; it is not advised for beginners.
A collar is an options strategy in which the stock is purchased or acquire. Or followed by the purchase of a put option at strike price A and the sale of a call option at strike price B. When using this method, an options trader hopes that the stock will trend higher. Also, be called away at the call strike price B. However, they also want to be covered in the event that the stock price drops below strike price A. allowing them to sell the stock and execute their option if that happens.
In essence, a collar option is what would occur if a trader wanted to simultaneously run a covered call and a protected put. When an investor wants downside protection but does not willing to pay for it. they typically use this method. They therefore cap their exposure to the downside in return for limiting their upside potential in order to meet their costs. Both short-term and long-term positions can use this tactic.
When to Use a Collar
If an investor is positive on the stock over the long term but is worried about short-term downward volatility. They should think considering utilizing a collar. A pandemic, unclear profitability, or any other short-term market. Uncertainty are a few examples of such things.
When a stock has made large gains that the investor doesn’t want to risk losing. They may also utilise a collar. In this situation, an investor can use a collar option strategy to safeguard their prior gains.
The investor buys an out-of-the-money put option that guards against a decline.Also, in stock price in order to apply the collar.
In a turbulent market, the collar is a very helpful technique since it protects the investor for little to no money. Allowing them to limit their possible loss if the stock moves lower while restricting their potential profit. The call option is sold above the stock price. Which allows the investor to still make a profit while allaying their concerns about the stock falling in value.
Profit/Loss
The difference between the stock price and the short call is used to determine the maximum profit, from which the cost of the collar (if it was purchased with borrowed money) is subtracted or the premium earned (if the position was opened with credit) is added. The maximum profit, in this case, would be Rs 5.30 if the stock was trading at Rs 100 and the trader bought a 95/105 collar for a Rs 0.30 credit.
The maximum loss is determined by removing the premium earned if the long put was opened for a credit. Adding the collar cost to the difference between the stock price and the long put. The maximum loss. For instance, would be Rs 4.70 if the stock was trading at Rs 100 and the purchaser purchased a 95/105 collar for a Rs 0.30 credit.
Breakeven
The breakeven point for the collar option is the same. But it is determined differently depending on whether the collar was purchased for a credit or a debit.
When buying a collar on credit, the breakeven point is determined by deducting the premium from the stock price.
If the collar is purchased on credit, the breakeven point would be determined by multiplying the purchase price by the stock price.
Example
A trader might execute a 95/105 collar by purchasing the stock. So, purchasing one put at the strike price of 95. Selling one call at the strike price of 105 for the following prices. If XYZ is trading at Rs 100 and is anticipated to trade lower during the following three months.
100 shares of XYZ stock are purchased for Rs 100.
For Rs 1.50, purchase 1 XYZ 95-strike price put.
1 XYZ 105-strike price call being sold for Rs 1.80.
The total premium is equal to Rs 0.30.
The call will be exercised and the investor will be required to sell the XYZ stock in their inventory for Rs 105. If the stock trades up to Rs 107 at expiration. As a result, they will earn a Rs 0.30 credit in addition to a Rs 5.00 profit on the stock, for a total gain of Rs 5.30.
The trader will execute the 95-strike price put and sell the stock at Rs 95 if the stock trades lower than Rs 91 at expiration. This would indicate that they suffered a loss of Rs 5.00 on the stock. But since they were able to sell the collar for a credit of Rs 0.30. Their actual loss was only Rs 4.70. Losses are never desirable. But in this case, having the collar on would be far better than if they had to bear the entire Rs 9.00 loss.
Conclusion
There is just one justification for entering a collar. To keep downside risk to a minimum while leaving room for upside possibilities. Option strategies of this kind might be purchased concurrently with stock purchases or added to existing stock positions. The fact that the trader is aware of the trade’s maximum gains and losses as soon as they enter the collar is one of its strongest features. Here, the trader limits their losses in exchange for the chance for large rewards.
Since it is long one option and short another, balancing the volatility effect. It is only very little sensitive to fluctuations in implied volatility. The collar is a great trading technique for a newbie. Since it enables the trader to profit from price increases while keeping them relatively secure. In case their bullish forecast is incorrect.
A defensive put strategy, often referred to as a synthetic long call or married put, is purchasing the stock first, followed by one put at strike price A. When an investor uses this technique, they hope the stock will trade upward but also want to be protected in case it drops below strike price A, which would give them the option to sell the shares.
This tactic is typically used when a trader wants to protect their downside while still having the opportunity to gain on their upside because they are concerned about the market. In the event that a stock price declines further, the protective put functions as a price floor, limiting the amount an investor can lose. The investor is shielded from further losses after the stock drops below the protective put’s strike price.
How to Use the Protective Put
An investor who already owns stock runs the risk of suffering losses if the stock falls lower. However, by purchasing a protective put option, an investor is ensuring that if the stock continues to decline, they will be able to sell it at a set price, so limiting their losses.
The investor is establishing a price floor that safeguards their asset since they have a contract in place to sell a stock at a specific price, should they choose to do so.
The protective put functions as asset insurance, and like all forms of insurance, a premium must be paid in exchange for this security. The premium is determined by the investor’s desired price floor as well as volatility, which measures the risk that the stock price will continue to decline. Additionally, the insurance has a time limit; the longer the investor wants the insurance to last, the more expensive the protective put purchase price will be.
Strike Prices for Protection
An investor has a number of options when executing a protective put, including the level strike price to use and the expiration date. Typically, investors choose a put option that is out of the money. When the strike price is less than the stock’s current price, this occurs. As is the price difference between the current stock price and the level where the protective put adds insurance, this does not offer full protection. However, there is a lower premium for this defensive put.
Investors may also purchase at the money put if they are more concerned about a decline in stock price. The increased premium required for this level of insurance results in 100% protection from any losses thanks to the more active protective put. Higher premiums are also a result of long-term protective puts.
Profit/Loss
The potential profit is limitless because the investor can keep making money as long as the stock trades at a higher price by owning the shares.
The maximum loss is determined by subtracting the stock price from the long put and then adding the put’s purchase price. The maximum loss, for instance, would be Rs 6.50 if the stock was trading at Rs 100 and the investor bought a 95-strike put for Rs 1.50.
Breakeven
The stock price plus the put price represents the protective put’s breakeven point. For instance, if the stock price is Rs 100 and the put price is Rs 1.50, the stock would need to increase by Rs 1.50 to break even, or Rs 101.50.
Example
If XYZ is trading at Rs 100 and is anticipated to rise in value during the following three months, a trader might purchase the stock and a put option with a 95-strike price for the sum of:
100 shares of XYZ stock are purchased for Rs 100.
For Rs 1.50, purchase 1 XYZ 95-strike price put.
The investor will make Rs 5.00 on the shares if the stock trades up to Rs 105 at expiration, but because they spent Rs 1.50 on the put, they will only make Rs 3.50 overall.
The trader will execute the 95-strike price put and sell the stock at Rs 95 if the stock price falls to Rs 91 by expiration. As a result, they would have suffered a loss of Rs 5.00 on the stock and a loss of Rs 6.50 overall because they paid Rs 1.50 for the protective put.
Conclusion
When purchasing a stock or adding a protective put to an existing stock position, the only reason to acquire one is to reduce potential downside losses.
The value of the put grows along with an increase in implied volatility, therefore an investor who is long a put benefits from an increase in implied volatility. The put would lose value and damage the investment if implied volatility fell.
For a novice who wishes to get insurance for their long stock position, this is a great technique. It is crucial to comprehend every facet of the trade and how it may effect the position’s profit or loss before engaging in any options strategy.
Purchasing a call and selling a put in the same month and at the same strike price creates a synthetic long stock position. If the investor uses this method and holds the position until expiration, they will purchase the shares at strike price A. The investor will want to exercise the call option if the stock price rises over strike price A, and the investor will be assigned on the put if the stock falls below strike price A, so they will ultimately own the stock at price A.
Most investors, however, do not want to keep the position until expiration because it resembles a long stock position.
Profit/Loss
The potential profit is limitless because the investor can keep making money as long as the stock trades at a higher price by owning the shares.
As the price of the stock declines, losses continue to accumulate and the maximum loss is likewise limitless, at least down to zero.
Breakeven
Regardless of whether it was purchased for a credit or a debit, the synthetic long stock has a single breakeven point that is computed differently.
The breakeven point would be determined by deducting the premium received from the strike price if the synthetic long stock had been purchased with credit.
The breakeven point would be determined by multiplying the purchase price of the synthetic long stock by the strike price if it were acquired on a debit.
Example
A trader might purchase a call with a strike price of 100 and sell a put with a strike price of 100 for the following exchange rate if XYZ is trading at Rs 100 and is anticipated to trade higher over the following three months:
Purchase one (Rs 4) XYZ 100-strike price call.
For Rs 3.50, sell 1 XYZ 100-strike price put.
Total premium = a debit of Rs 0.50
The investor will profit Rs 5.00 on the stock if it goes up to Rs 105 at expiration, but because they invested Rs 0.50 on the synthetic long stock, their net gain will only be Rs 4.50.
A 100-strike price put will be assigned to the trader, who will then purchase the shares for Rs 100 if the stock trades lower than Rs 95 at expiration. This would indicate that they suffered a Rs 5.00 loss on the put, but because they paid Rs 0.50 for the synthetic long stock, their overall loss would be Rs 5.50.
Conclusion
The only justification for purchasing a synthetic long stock option would be to have the same position as a stock without paying the high stock prices. Of course, the trader’s investment bank and margin requirements play a role in this. Because they don’t want their money to be tied down, most investors don’t hold their positions until they expire, which is why they initially utilised a synthetic long stock option call.
Due to the fact that this form of strategy is long one option and short another, it is not extremely sensitive to fluctuations in implied volatility.
Purchasing an out-of-the-money call option and selling an out-of-the-money put option in the same expiration month is the risk-reversal options trading method. This is a very bullish trade that, depending on where the strikes are in regard to the stock, can be executed for a debit or a credit.
The investor that engages in a risk reversal seeks to gain by holding call options while covering the cost of the call by selling put options. This trade setting avoids the danger of the market moving sideways, but it carries a significant risk if the stock moves downward.
When to Use a Risk Reversal
When compared to a collar option strategy, the risk reversal has the opposite effect. When an investor is short the underlying asset. However it can shield them from a rising stock price. An investor can buy an upside call and then sell a downside put to cover the cost. And if they are concerned that the stock price of a short stock position will increase. One risk reversal option contract should be executed for every 100 shares the investor is short in the trade, or one-to-one. The upside long call option would protect the investor if the stock rose in price. The investor would be compelled to purchase the shares at the short put’s lower price point if the stock traded at a lower price.
An aggressive bull trade can also be employed as a risk reversal. The investor is essentially doing a bull trade at little to no cost or even a credit because they are purchasing a call option with a higher strike price and financing the premium by selling a put option that is out of the money. And If the investor is right and the stock price rises more. And the short put will lose all of its value and the long call will gain more, resulting in a sizable profit.
If the investor predicts the stock movement incorrectly, they will be compelled to purchase the shares at the short put strike price. Although there is a high potential for loss and this is exceedingly dangerous. Even if the investor is compelled to buy the stock at a lower price than where they opened the risk reversal, this is still a better result than if they had bought the stock right away.
Profit/Loss
The potential profit is limitless because holding an upward call enables the investor to keep profiting as the stock rises in value.
As the stock’s price declines, losses from the short put keep piling up, and the maximum loss is also limitless, at least all the way to zero.
Breakeven
If a risk reversal was done for a credit or a debit, the breakeven point is the same, but the calculation is different.
The breakeven would be determined by deducting the premium received from the put’s strike price if the risk reversal was purchased for a credit.
The breakeven would be computed by adding the amount paid to the call’s strike price if the risk reversal was purchased for a debit.
Example
A trader might purchase a call with a 120-strike price and sell a put with an 80-strike price for the following price if XYZ is trading at Rs 100 and is anticipated to trade higher over the following year:
For Rs 6, purchase 1 XYZ 120-strike price call.
For Rs 7.00, sell 1 XYZ 100-strike price put.
Total premiums equal a Rs 1 credit.
The investor will make no money if the stock rises up to Rs 105 at expiration because it has not yet hit the strike price, but they will make money because they received a Rs 1.00 credit on the risk reversal.
The investor will profit Rs 10.00 from the call if the stock rises to Rs 130 at expiration because it is now Rs 10 above the 120-strike price. However, the investor will have a net gain of Rs 11.00 because they earned a credit of Rs 1.00 for the risk reversal.
The trader will be assigned on the 80-strike price put and compelled to buy the shares at Rs 80 if the stock trades lower than Rs 70 at expiration. This would indicate that they suffered a loss of Rs 10.00 on the put, but since they were given a credit of Rs 1.00 for the risk reversal, their actual loss would be Rs 9.00.
Conclusion
If handled properly, the risk reversal position offers a very high potential for profits, but if done incorrectly, it can result in huge losses for an investor.
Due to the fact that this form of strategy is long one option and short another, it is not extremely sensitive to fluctuations in implied volatility.
Risk reversals are not recommended for new investors because they might result in significant losses if the transaction moves against them. Only experienced options traders should use it.
Despite posting solid Q4 earnings in 2023, Indian Railway Catering and Tourism Corporation’s share price today was under selling pressure. Today’s opening gap to the negative led to the IRCTC share price hitting an intraday low of $627.30 per share on the NSE, a decrease of about 3% from Monday’s closing of $645.75 per share.
IRCTC Q4 results 2023 are in line with market expectations, thus stock market experts advise positioning investors to take advantage of this decrease in share price as a purchasing opportunity. So, shortly after the stock market opened today, profit booking in IRCTC shares was triggered. They claimed that the level of 605 per share provides solid support for the price of IRCTC stock. According to experts, ITCTC shares have resistance at 650 and once clearing this barrier, it may turn positive for the short to medium term and increase to levels of 727 per share.
IRCTC share prices are dropping due to the profit booking trigger in early morning deals, according to Chandan Taparia, a derivative and technical analyst at Motilal Oswal. IRCTC’s Q4 2023 earnings were in line with forecasts yesterday, and as a result, profit taking in the stock began as soon as the market opened today. However, as the company is anticipated to rebound rapidly from its current lows, investors should view this dip in IRCTC shares as a buying opportunity.
According to Chandan Taparia, the IRCTC share price has a hurdle set around 650 per share levels, and once it overcomes this immediate resistance, set at 650 per share levels, it may turn very bullish. He recommended IRCTC stockholders to hold onto their shares since they could experience a substantial rebound from current lows.
What is IRCTC stand for?
The IRCTC is the Indian Railway Catering and Tourism Corporation. The Ministry of Railways formed an Indian Railways subsidiary to manage catering, tourist, and online ticketing services. Mahendra Pratap Mall is the IRCTC’s current (as of October 2017) chairman and executive director.
Goals of IRCTC?
Be simple to utilise.
Utilise resources as efficiently as possible while enhancing human resource effectiveness.
progress in the agency sector and a merger to create a catering service with exceptional efficiency.
In order to create commercial prospects, make use of public-private partnerships.
Expand High standards, business ethics, processes for ensuring quality, and cost management.
Where is the headquarter of IRCTC?
IRCTC is headquartered in New Delhi, India.
IRCTC Mission?
Utilising industry best practises, to enhance customer service and facilitation in the train catering, hotel, transport, and tourism sectors.
Advantages of IRCTC?
IRCTC provides a variety of amenities, including the opportunity to check seat and ticket availability.
You can make a trekking map available to frequent travellers.
Tatkal ticket reservations are available.
However, There are alternatives for booking special trains.
enables customers to make online payments using a credit or debit card, net banking, or both.
A flight booking service is also available.
Disadvantages of IRCTC?
Due to the high volume of users creating tickets on this website, sluggish replies or hangs may occur.
It’s possible that your payment gateway will not work properly once you’ve completed the entire ticket booking form.
Your bank account will be debited without a ticket being printed.
IRCTC share price target 2023
Chandan Taparia of Motilal Oswal revealed a money-making technique for IRCTC shares, saying. Also, .”One can buy IRCTC shares at around 630 apiece levels for immediate target of 650 and 670 maintaining.”
Furthermore, According to Vaishali Parekh, Vice President of Technical Research at Prabhudas Lilladher, who shared Chandan Taparia’s opinions, the IRCTC share price “bottomed out near the 560 zone and given a decent pullback towards 630 levels where the stock has been in consolidation and currently has given a strong positive candle to indicate a breakout above the rectangular box anticipating for further upside move with improvement in the bias. After a brief drop, the RSI has recovered strength to recommend a buy, with significant upside potential to maintain the trend.
Keep a close eye on the share price objective if you’re an investor looking for long-term gains in the Indian Railway Catering and Tourism Corporation Limited (IRCTC). Analysts have set price targets of $2800 and $3000, which, if purchased in advance of forecasts, could both be reached with respectable returns in a short period of time.
IRCTC is expanding significantly, and after the business splits its stock, the share price target is anticipated to rise. Although, The first anticipated aim for 2023 is 730.498, while the second is expected to be 752.464.
IRCTC Share Price Target 2023
First Target
₹730.498
Second Target
₹752.464
IRCTC Q4 results 2023
IRCTC reported a net profit of 278.8 crore in the fourth quarter of FY23, up from 214 crore in the same quarter a year earlier. IRCTC reported double-digit year-over-year growth in all major metrics and recommended a 100% dividend for its shareholders. In Q4FY23, operating revenue increased by 39.7% to $965 crore from $691 crore in Q4 of the previous fiscal year.
Sensex was intended to stand for the Bombay Stock Exchange’s 30 firms’ most popular market index.
Some of the largest corporations in this nation with the most actively traded equities are among the component companies listed in this index today.
The S&P BSE Index Committee chooses the companies that will be included under it based on the following five criteria:
Companies must be listed on the Indian Bombay Stock Exchange.
It has to be made up of big- or mega-cap stocks.
It must be mostly liquid.
It must make money from its core operations.
To keep the sector in balance with the nation’s equity market, businesses must participate.
It has had remarkable expansion ever since it first opened in the 1990s, particularly after 2000. For instance, information technology firms contributed to the index’s first crossing of the 6000 threshold in 2002. The significant rise in India’s Gross Domestic Product (GDP) since the turn of the century is responsible for this growth curve.
Axis Bank, Asian Paints, Bajaj Finance, Bharti Airtel, Coal India, HCL Technologies, Hindustan Unilever, ICICI Bank, IndusInd Bank, Tata Consultancy Services, Larsen & Toubro, and others are a few of the businesses included in this index.
Who owns Sensex?
Foundation
1 January 1986
Operator
ASIA INDEX Pvt.Ltd.
Exchanges
BSE
Trading symbol
^BSESN
What is the Full Form of Sensex?
Stock Exchange Sensitive Index is the official name of SENSEX. SENSEX, previously known as BSE (Bombay Stock market), is the oldest stock market in India. It is a free-floating, economy-weighted index made up of 30 very reputable, financially stable companies that are listed on the BSE. In India, these businesses are also known as Blue chip corporations. The 30 component companies, which are among the most prosperous and actively traded equities in India, represent a variety of industries.
How Does the Sensex Work?
The 30 largest and most liquid public firms in India make up the S&P BSE Sensex index, also known as the Sensex or Sensex Index. The Bombay Stock Exchange, the biggest in India and one of the biggest in the world, is where the firms that make up the Sensex are chosen from. The Sensex is widely used by investors throughout the globe as a gauge of the overall health of the Indian economy, which has experienced rapid expansion in recent years.
How is Sensex Calculated?
To guarantee that it accurately reflects the state of the stock market, BSE periodically adjusts the share composition of the Sensex. The index was first determined using a weighted method of market capitalization.
But this computation approach has been updated since 2003 and now incorporates a free-float capitalization method.
This free-float technique is an alternative to the market-capitalization method in which the index is calculated using the number of shares available for sale under a corporation rather than the number of outstanding shares. Thus, restricted stocks (those held by corporate insiders) that are not for sale are not included in this strategy.
The ratio of issued shares to outstanding shares is this factor. The index level constantly represents the free-float value of the 30 listed firms under the Sensex, relative to a base period, in accordance with this free-float capitalization technique.
How To Invest In Sensex?
The essential actions to take before beginning your investment in the Sensex are as follows:
Opening a Demat Account
It is crucial to have a Demataccount where your shares are stored electronically.
Open a Trading Account
You should register to start a trading account after opening a Demat account. Since the BSE does not permit the sale or purchase of securities directly. A trading account makes it simple to buy and sell assets online.
Having a Bank Account
To trade on the Sensex, an investor needs a bank account, a PAN card, in addition to a Demat and trading account.
Sensex 30 Companies: Their Weightage in The Index [2023]
SL
WEIGHT(%)
Name
Industry
Price
Mcap Full (Cr.)
M.Cap FF (Cr.)
1
11.95
RIL
Integrated Oil & Gas
2555.95
16,51,687.33
8,25,843.67
2
10.38
HDFC Bank
Banks
1508.6
9,07,505.07
7,16,929.00
3
9.37
ICICI Bank
Banks
908.35
6,47,532.81
6,47,532.81
4
7.1
HDFC
Personal Products
2497.25
4,95,541.41
4,90,586.00
5
6.5
Infosys
IT Consulting & Software
1530.5
5,22,358.84
4,49,228.60
6
5.48
ITC
Cigarettes,Tobacco Products
353.75
5,32,975.54
3,78,412.63
7
4.79
TCS
IT Consulting & Software
3207.15
11,82,184.61
3,31,011.69
8
4.16
L&T
Construction & Engineering
2006.9
3,34,188.53
2,87,402.13
9
4.1
Kotak Mahindra Bank
Banks
1899.85
3,83,077.64
2,83,477.45
10
3.43
Axis Bank
Banks
863.95
2,66,196.52
2,36,914.90
11
3.23
HUL
Housing Finance
2546.35
5,87,632.77
2,23,300.45
12
3.2
SBI
Banks
584.8
5,14,370.01
2,21,179.10
13
2.8
Bharti Airtel
Telecom Services
818.4
4,39,153.22
1,93,227.42
14
2.46
Bajaj Finance
Holding Companies
7121.6
3,86,764.29
1,70,176.29
15
1.97
Asian Paints
Furniture,Furnishing,Paints
3140.5
2,88,900.78
1,35,783.37
16
1.72
Maruti Suzuki India
Cars & Utility Vehicles
9236.35
2,69,671.40
1,18,655.42
17
1.68
M&M
Cars & Utility Vehicles
1335.7
1,50,777.87
1,16,098.96
18
1.65
Titan Co
Other Apparels & Accessories
2763.25
2,42,805.08
1,14,118.39
19
1.62
HCL Tech
IT Consulting & Software
1044.8
2,86,413.78
1,11,701.38
20
1.52
Sun Pharma
Pharmaceuticals
1044
2,32,838.00
1,04,777.10
21
1.27
UltraTech Cement
Cement & Cement Products
6727.55
2,20,195.51
88,078.20
22
1.27
Tata Steel
Iron & Steel/Interm.Products
102.2
1,32,769.30
87,627.74
23
1.2
NTPC
Electric Utilities
178.15
1,68,915.92
82,768.80
24
1.19
Power Grid
Electric Utilities
228.05
1,68,073.54
82,356.03
25
1.19
Bajaj Finserv
Finance (including NBFCs)
1723.25
2,16,551.23
82,289.47
26
1.14
Nestle India
Packaged Foods
20418.8
2,12,197.97
78,513.25
27
1.01
IndusInd Bank
Banks
1148.15
83,335.02
70,001.42
28
0.94
Tech Mahindra
IT Consulting & Software
1052.95
1,01,006.06
64,643.88
29
0.87
Dr Reddy’s Labs
Pharmaceuticals
4592.35
82,209.14
60,012.67
30
0.81
Wipro
IT Consulting & Software
388.65
2,08,272.64
56,233.61
What is S&P BSE Sensex?
It serves as a leading indicator of the Indian economy. This index contains 30 stocks with a number. These 30 businesses are the biggest and most liquid in their respective industries. They are authentic representatives of their sector or business because of their size and trading volume. Companies from a variety of industries and areas are also included in the index. The index, like the Sensex, is able to reflect the economy’s progress thanks to this diversity of businesses.
S&P BSE Sensex’s base yearis 1978-1979. Sensex debuted on January 1, 1986.
Sector/Industry Weightage in Sensex
Currently, 18 sectors (industries) are represented by the Sensex 30 businesses. The list of industries this bellwether index covers is provided below. Each sector’s weight is also mentioned.
The index is heavily weighted towards the banking industry, with IT and Oil & Gas following closely behind.
To operate, every company needs money. Sometimes the revenue generated by selling goods or services is insufficient to cover the costs of working capital. In order to run their business effectively, firms encourage regular people like you and me to participate in it. In exchange, investors receive a piece of the company’s profits.
Understanding this is the first step in learning the fundamentals of the stock market. Let’s investigate this in greater detail.
What are Stocks?
Stocks are just one investing strategy for increasing wealth. Purchasing shares in a firm entitles you to ownership of that company’s common stock.
One option to invest in some of the most prosperous businesses is through stock investments.
Additionally, there are several stock types available on the market for trading or investing. Based on the following characteristics, these stocks are categorised:
Market capitalization
Ownership
Fundamentals
Price votality
Profit sharing
Economic trends
How Does the Stock Market Work?
Companies offer ownership holdings to investors in order to raise capital on the stock market. Shares of stock are the name for these equity investments.
Companies can get the money they need to run and grow their operations without taking on debt by listing shares for sale on the stock exchanges that make up the stock market. By swapping their funds for shares on the stock market, investors gain.
As businesses use that money to develop and expand, investors profit because their stock shares appreciate in value over time, resulting in capital gains. As their revenues increase, businesses also distribute dividends to their shareholders.
Individual stock performance over time varies greatly, but the stock market as a whole historically has given investors average annual returns of about 10%, making it one of the most dependable methods to increase your money.
Stock Market Basics – Important Terms
The terminologies that are frequently used when discussing the stock market are listed below. This can serve as a vocabulary that you can consult whenever you wish to learn.
Securities and Exchange Board of India (Sebi) is the securities market regulator to oversee any fraudulent transactions and activities made by any of the parties: companies, investors, traders, brokers and the likes.
Demat
Demat, or dematerialised account, is a form of an online portfolio that holds a customer’s shares and other securities in an electronic (dematerialised) format.
Trading
It is the process of buying or selling of shares in a company.
Stock Index
A stock index or stock market index is a statistical source that measures financial market fluctuations. They are performance indicators that indicate the performance of a certain market segment or the market as a whole.
Portfolio
It is a collection of a wide range of assets that are owned by investors. Portfolio can also include valuables ranging from gold, stocks, funds, derivatives, property, cash equivalents, bonds, etc.
Bull Market
In a bull market, companies tend to generate more revenue, and as the economy grows, consumers are more likely to spend.
Bear Market
Bear markets refers to a slowdown in the economy, which may make consumers less likely to spend and, in turn, lower the GDP.
Nifty50
Nifty 50 is a collection of the top 50 companies listed on National Stock Exchange (NSE).
Stock Market Broker
A stock broker is an investment advisor who execute transactions such as the buying and selling of stocks on behalf of their clients.
Bid Price
Bid price is the highest price a buyer will pay to buy a specified number of shares of a stock at any given time.
Ask Price
Ask price in stock market refers to the lowest price at which a seller will sell the stock.
Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is the largest source of funds with long or indefinite maturity for the company.
Equity
Equity is the value that would be received by the shareholder if all of the company’s assets were liquidated and all of the company’s debts were paid off.
Dividend
Dividend refers to cash or reward that a company provides to its shareholders. It can be issued in various forms, such as cash payment, stocks or any other form.
Bombay Stock Exchange (BSE) is the largest and first securities exchange market in India. It was established in 1875 as the Native Share and Stock Brokers’ Association. It is also the first stock exchange in India and provides an equities trading platform for small-and-medium enterprises.
National Stock Exchange was the first to implement screen-based or electronic trading in India. It is the fourth largest stock exchange in the world in terms of equity trading volume as per the World Federation of Exchanges (WFE).
Types of Stock Market?
There are 2 types of stock market:
1.Primary Market: It serves as a venue for companies to list new stock options and bonds for purchase by the general public while also creating securities.
2.Secondary Market: With the aid of brokers, investors trade securities here without involving the original corporations that issued them.
Rules of Investment:
1.Invest early
2.Invest regularly
3.Invest for long term and not for short term
Therefore, the investor should always be mindful of these guidelines while making investments—not just in the stock market but also in other types of investments.
How to Tackle risk involved in Stock Market?
It has been observed that the average individual is not willing to engage in the stock market because of the risk involved; they believe that their hard-earned money would be lost in the market as a result of market fluctuations.
However, the only way to handle the situation is for a person to invest their money in a diversified portfolio, which means they shouldn’t put all of their money into a single security but rather spread it across a variety of securities so that any losses from one security are offset by gains from other securities.
A balanced fund is a very good product on the market that invests a proportionate amount of capital in risky assets (stocks and shares) and the remaining capital in safe assets (debt securities). The percentage of this investment is chosen in such a way that the investor seldom experiences any loss.
Key Financial Instruments To Trade In The Stock Market
Bonds
Shares
Derivatives
Mutual Fund
1.Bonds
For projects, businesses require money. The money they have made from the enterprise is then used to repay them. Bonds are one method of raising money. A loan is what a business obtains from a bank in exchange for recurrent interest payments. Similar to this, a bond is what a business issues when it borrows money from numerous investors in return for periodic interest payments.
Consider starting a project that will begin to generate revenue in two years. You will require an initial sum of money to start the project. You borrow the money from a buddy and then write on the receipt, “I owe you Rs. 1 lakh and will repay you the principal loan amount by five years, and I will pay a 5% interest per year until then.” If your acquaintance is holding this receipt, it signifies he recently purchased a bond by making a loan to your business. You commit to paying the 5% interest each year at the end and the Rs. 1 lakh principal at the end of the fifth year.
Consequently, a bond is a way to invest money by making loans to other people. It is called a debt instrument for this reason. When investing in bonds, you will see the face value, which is the amount of money being borrowed, the coupon rate or yield, which is the interest rate the borrower must pay, the coupon payments, and the maturity date, which is the date by which the money must be repaid.
2.Shares
Consequently, a bond is a way to invest money by making loans to other people. It is called a debt instrument for this reason. When investing in bonds, you will see the face value, which is the amount of money being borrowed, the coupon rate or yield, which is the interest rate the borrower must pay, the coupon payments, and the maturity date, which is the date by which the money must be repaid.
You just agreed to pay your brother Rs 50,000 to sell him half of your business. You document this deal in writing: “One hundred shares of stock will be issued by my new company.” For Rs. 50,000, my brother will purchase 50 shares. As a result, your brother recently purchased 50% of the stock in your company. He currently owns shares. Let’s say your brother requires Rs 50,000 right away. He can get the money by selling the stake on the secondary market. Given that the share price could change, this could be greater than or less than Rs 50,000. It is viewed as a riskier instrument as a result.
Thus, shares serve as a record of a corporation’s ownership. As a result, as a stockholder, you share in both potential profits and potential losses that the firm may experience. Your equities’ value will rise if the business performs better, increasing the return on your investment.
3.Mutual Funds
These are financial entities that let you make covert investments in bonds or the stock market. It collects funds from a number of investors and invests the whole amount in financial instruments. The professional fund manager is in charge of this.
Every scheme issues units, each of which has a fixed value similar to a share. This means that when you invest, you become a unit-holder. As a unit holder, your investment’s value rises when the securities in which the MF scheme invests gain money.
Either the value of the units increases, or money is distributed to all unit holders in the form of dividends.
4.Derivatives
Financial instruments like shares constantly fluctuate in value. Therefore, it is challenging to set a certain price. Here, derivatives instruments are useful. These are tools that enable you to trade in the future at a fixed price today. You just engage into a contract to purchase or sell a share or other financial instrument at a predetermined set price.
