Investment Valuation in India

Employee Stock Option Plans (ESOPs) also known as Equity Incentive Plans is one the commonly used compensation tools by companies. Organisations offer ESOPs to their employees as part retention strategies. Some of the other key drivers for implementing ESOPs are wealth creation for employees, enabling high performance, and instilling a feeling of ownership for the organization amongst employees. What is ESOP? An ESOP is a right to buy shares of the employer company at a pre-determined price. Organisations often grant their key employees an option under the plan that confers a right, but not an obligation, on the employee to buy the shares of their company. Stock options are subject to vesting, requiring continued service (and sometimes performance) over a specified period of time. Upon vesting of options, employees can exercise them to get shares, by paying the pre-determined exercise price. ESOPs can be an important tool for both attracting and retaining good talent in ...

The Black and Scholes Model : The Black and Scholes Option Pricing Model didn't appear overnight, in fact, Fisher Black started out working to create a valuation model for stock warrants. This work involved calculating a derivative to measure how the discount rate of a warrant varies with time and stock price. The result of this calculation held a striking resemblance to a well-known heat transfer equation. Soon after this discovery, Myron Scholes joined Black and the result of their work is a startlingly accurate option pricing model. Black and Scholes can't take all credit for their work, in fact their model is actually an improved version of a previous model developed by A. James Boness in his Ph.D. dissertation at the University of Chicago. Black and Scholes' improvements on the Boness model come in the form of a proof that the risk-free interest rate is the correct discount factor, and with the absence of assumptions regarding investor's risk preferences. The M...

Please find the link below to download the ebook on Futures and options trading strategies. Futures & Options Trading Strategies Please note that ebooks in the links may have specific copyrights and full credits are given to the authors and publishers. These are freely circulated for educational purposes only.

What is a Futures Contract? Futures contract means a legally binding agreement to buy or sell the underlying security on a future date . Future contracts are the organised/standardised contracts in terms of quantity, quality (in case of commodities), delivery time and place for settlement on any date in future. The contract expires on a pre-specified date which is called the expiry date of the contract. On expiry, futures can be settled by delivery of the underlying asset or cash . Cash settlement entails paying/receiving the difference between the price at which the contract was entered and the price of the underlying asset at the time of expiry of the contract. What is an Option contract? Option contract is a type of derivatives contract which gives the buyer/holder of the contract the right (but not the obligation) to buy/sell the underlying asset at a predetermined price within or at end of a specified period . The buyer/holder of the option, purchases the right from the seller/wri...