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Constraints

NOT NULL CONSTRAINT -    Ensures that a column cannot have a null value. DEFAULT CONSTRAINT -    Provides a default value for a column when none is specified  UNIQUE CONSTRAINT -   Ensures that all values in columns are different  CHECK CONSTRAINT -   Makes sure that all values in a column satisfy certain criteria  PRIMARY KEY CONSTRAINT -   Used to uniquely identify a row in the table  FOREIGN KEY CONSTRAINT -   Used to ensure referential integrity of the data  Primary Key - is used uniquely to identify each row in a table . It can consist of one or more columns on a table . When Multiple columns are used on a table it is called composite key.  Foreign Key - Foreign key is a column or columns that references a column most often primary key of another table . The purpose of foreign key is to maintain referential integrity of the data. Pg admin  Data base - training - right click on training - query click  Always add semi colen to run the query  Int - integer  varchar - variable charact
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Derivative Exercise

 1. An Option is an agreement between 2 parties which gives buyer the option The right and not the obligation , to buy  or sell pre decided quantity and quality of underlying asset.

2. On the due date , the buyer of option exercise right or lapse .

3. Put option is a contract in which option buyer has the right to sell at the exercise price.

4. The pre decided price at which option buyer is eligible to buy or sell the underlying asset is known as Exercise price .

5. In case of call option when ruling spot price exceeds Exercise price then the option is In the Money .

Question ---

 Today on 2nd July 2010 Sand P is trading at 4350. Mr bazarwala is contemplating buying option on September 2010 S and P CNX Nifty Index . From the below provided data compute moneyness , intrinsic value and time value of the S and P CNX Nifty Index Option . 

Sept 2010                   Call Premium               Sept 2010                      Put Premium 

Strike Price                 Cpr                               Strike Price             

Xc                                                                         Xp                                     Ppr

4200                            175                                   4500                                   185

4350                            150                                   4350                                   160

4500                             20                                     4200                                   25


Solution 

Call

4200 4350 - In The Money       Intrinsic Value -150           Time Value - 175

4350 4350 - At The Money      Intrinsic Value - 0               Time value - 150

4500 4350 - Out The Money    Intrinsic Value - 150           Time Value - 20


Put 

4500 4350 -  In The Money      Intrinsic Value - 150           Time Value - 35

4350 4350 - At The Money      Intrinsic Value -  0             Time Value - 160

4200 4350 - Out  The Money    Intrinsic Value - 150         Time Value - 25


Question ---

Exercise Price 1750 

1. What is intrinsic value of option trading at 1710 - 0

2. Intrinsic value  of option when trading at 1790 -  40

3. What would you do on expiry date if they trades at 1725 - Not exercise 

4. What would you do if trades at 1755 - Yes 





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