Xchange
This query is : Resolved
25 May 2014
How Can One sell what he actually doesnt own...??I hv dis ques.in regard of Futures??
Nikhil Kaushik
(Expert)
25 May 2014
to understand this, first understand the concept of Forwards through a small example:
lets say Divya has made an export sale and is expecting to receive USD 2000 in July end. Now today INR-USD is 60 but she expects that once new govt comes, rupee will appreciate and be around 55 in July end. Now if it happens, you will lose Rs 5 per dollar resulting in overall loss of Rs 10000.
So Divya goes and enter into a contract to sell USD 2000 to a bank on 31 July 2014 at INR-USD 60. This helps her in safeguarding from any possible appreciation of Rupee. at july end she will receive USD 2000 from her client and exchange it with the Bank at Rs 60 per dollar.
What you are referring to as selling without owning is this contract Divya signed above with the bank. It is a contract to sell on a future date.
In futures, though there is no need for actual delivery. You settle the transaction in cash. So if you get into a futures sell contract for USD 2000, on the expiry date you just settle in differential amount. If INR-UDS on that day is USD 55, then you get Rs per dollar...if INR-USD is 61, you pay Rs 1 per dollar.
lets say Divya has made an export sale and is expecting to receive USD 2000 in July end. Now today INR-USD is 60 but she expects that once new govt comes, rupee will appreciate and be around 55 in July end. Now if it happens, you will lose Rs 5 per dollar resulting in overall loss of Rs 10000.
So Divya goes and enter into a contract to sell USD 2000 to a bank on 31 July 2014 at INR-USD 60. This helps her in safeguarding from any possible appreciation of Rupee. at july end she will receive USD 2000 from her client and exchange it with the Bank at Rs 60 per dollar.
What you are referring to as selling without owning is this contract Divya signed above with the bank. It is a contract to sell on a future date.
In futures, though there is no need for actual delivery. You settle the transaction in cash. So if you get into a futures sell contract for USD 2000, on the expiry date you just settle in differential amount. If INR-UDS on that day is USD 55, then you get Rs per dollar...if INR-USD is 61, you pay Rs 1 per dollar.
Rupesh Jain
(Expert)
31 May 2014
at present as per sebi guidelines
one person have shares then shares sell through trading a/c of the same person due to this account like with the PAN.
one person have shares then shares sell through trading a/c of the same person due to this account like with the PAN.
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