Efficacy of Nifty Index Options through BSM Model
K. Prabhakar Raj Kumar1, D. Suba Lakshmi2
1Dr. K. Prabhakar Raj Kumar, Associate Professor, Department of Commerce, Periyar University, Salem (Tamil Nadu), India.
2D. Suba Lakshmi, Ph.D Scholar, Department of Commerce, Periyar University, Salem (Tamil Nadu), India.
Manuscript received on 28 November 2019 | Revised Manuscript received on 04 December 2019 | Manuscript Published on 10 December 2019 | PP: 947-949 | Volume-8 Issue-3S2 October 2019 | Retrieval Number: C12611083S219/2019©BEIESP | DOI: 10.35940/ijrte.C1261.1083S219
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: Options are one of the products in financial derivatives, which gives the rights to buy and sell the product to an option holder in pre-fixed price which known as the strike price or exercise price at certain periods. Options contract was existed in various countries for long time, but it became very popular among the investors when the Fisher Black, Myron Scholes and Robert Merton were introduced the Black-Scholes Model in the year of 1973. This model was formerly developed by these three economists who were also receiving the Nobel prize for finding this innovative model. This model is mainly used to deal with the theoretical pricing challenge in options price determination. In India the trading in Index Options commenced on 4th June 2001 and Options on individual securities commenced on 2nd July 2001. There are many types in options contracts like stock options; Index options, weather options, real options and etc. This study has mainly been focusing on Nifty 50 index options which are effectively trade at NSE. This paper goes to describe about the importance of options pricing and how the BSM model has effectively used to find the optimum price of the theoretical value of call and put options.
Keywords: Index Options, BSM Model, Market Price, Options Pricing Model.
Scope of the Article: e-governance, e-Commerce, e-business, e-Learning