Effect of Option Trading in Indian Cash Market

Download or read book Effect of Option Trading in Indian Cash Market written by Dr. Kedar Nath Mukherjee and published by . This book was released on 2006 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: By applying the open interest and volume based predictors, this study investigates the impact of two option market non-price variables in predicting the future price movements in underlying cash market over a period of time. Though being insignificant just after its initiation, the open interest based predictors are found to be statistically significant, even more than the volume based predictors, in the later periods. The most interesting finding is that, hedging, the basic purpose of introducing such instrument has been shifted towards speculation in the subsequent periods. It has also been found that the option expiration effect would not arise exactly on the expiration date, but starts at least from the previous five days up to the date of expiration.