Hedging Strategies

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• Financial Management is about preparing, directing and

managing the money activities of a company such as buying,
selling and using money to its best results to maximise wealth
or produce best value for money.
The key objectives of financial management would be to:

• Create wealth for the business
• Generate cash, and
• Provide an adequate return on investment.
There are three key elements to the process of financial

management:
(1) Financial Planning
(2) Financial Control
(3) Financial Decision-making
CURRENCY DERIVATIVES:
 One of the most significant events in the securities markets has been
the development and expansion of financial derivatives. The term
“derivatives” is used to refer to financial instruments which derive
their value from some underlying assets. The underlying assets could
be equities (shares), debts (bonds, T-bills, and notes), currencies,
and even indices of these various assets, such as the Nifty 50 Index.
 Derivatives derive their names from their respective underlying

asset. Thus if a derivative’s underlying asset is equity, it is called
equity derivative and so on. Derivatives can be traded either on a
regulated exchange, such as the NSE or off the exchanges, i.e.,
directly between the different parties, which is called “over-the-
counter” (OTC) trading.
OPTIONS:
 Like forwards and futures, options are derivative instruments that

provide the opportunity to buy or sell an underlying asset on a
future date.
 An option is a derivative contract between a buyer and a seller,

where one party (say First Party) gives to the other (say Second
Party) the right, but not the obligation, to buy from (or sell to) the
First Party the underlying asset on or before a specific day at an
agreed-upon price. In return for granting the option, the party
granting the option collects a payment from the other party. This
payment collected is called the “premium” or price of the option.
NEED OF THE STUDY:-
 The main purpose of this project was to know about the currencies
derivatives and its functioning.
 This helps to know the details about brokerage industries right from
inspection stage, future and options strategies.
 It also helps in risk management and losses.

SCOPE OF THE STUDY:-
 The project deals with the hedging strategies of currencies

markets in options under the regulatory environment of SEBI
regulation Act -1996 enforcing uniformity in rules and
regulations and performance evaluating currency derivatives.
 Finally the impact of regulatory on the performance of currency

derivatives and performance of selected other currency the
period of study restricted to a very limited period as volatile
market conditions will be considered.
OBJECTIVES OF THE STUDY:-
1. To understand the concept of hedging strategies of currency

markets on derivatives
2. To observe the pay off profile of different options
3. To analyse the volatility in currency markets and options
4. To evaluate the effectiveness of hedging
5. Based on the study to give findings and suggestions.

DATA COLLECTION:-
 The data collected was not a primary in nature secondary data

was used. The secondary data getting on monthly base that should
be used to calculate the risk through derivatives (in that used
options) those are spot buy, call buy, call sell, put buy, put sell.
According to those, taken a strike price and premium that
collected at high volatility month (i.e. 1-jun- 2017) currency’s
this data base collected from website invest India .com and
evaluate the performance and we can the minimize the risk in
currency’s.
SEARCH METHODOLOGY:-
The methodology section is the blue print for researcher activity and
specifies how the investigator intents to study the people or describe
social settings. In other words the methodology section make explicit
the study desire and constitutes the “how to do it” phase.
The project study has been conducted by collecting SECONDARY DATA

only.
LIMITATIONS:-
 I had taken historical prices of one month currency only.
 I had used call and put options only.
 I had not used any combinational strategies.
 Unavailability of complete data as it is a secondary data.
 Lack of time .

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• Financial Management is about preparing, directing and

The key objectives of financial management would be to:

There are three key elements to the process of financial

 Derivatives derive their names from their respective underlying

 Like forwards and futures, options are derivative instruments that

 An option is a derivative contract between a buyer and a seller,

 It also helps in risk management and losses.

 The project deals with the hedging strategies of currencies

 Finally the impact of regulatory on the performance of currency

1. To understand the concept of hedging strategies of currency

2. To observe the pay off profile of different options

3. To analyse the volatility in currency markets and options

4. To evaluate the effectiveness of hedging

5. Based on the study to give findings and suggestions.

 The data collected was not a primary in nature secondary data

The project study has been conducted by collecting SECONDARY DATA

 I had taken historical prices of one month currency only.

 I had used call and put options only.

 I had not used any combinational strategies.

 Unavailability of complete data as it is a secondary data.

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