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Nifty Bank 40874.35 (-0.88%)
Nifty IT 35503.9 (0.97%)
Nifty Financial Services 19504.75 (-0.74%)
Adani Ports 745.85 (-0.54%)
Asian Paints 3094.65 (4.20%)
Axis Bank 787.50 (-6.46%)
B P C L 427.70 (-0.78%)
Bajaj Auto 3776.50 (-0.40%)
Bajaj Finance 7482.15 (-4.75%)
Bajaj Finserv 18012.00 (-1.86%)
Bharti Airtel 702.35 (0.88%)
Britannia Inds. 3697.85 (0.14%)
Cipla 922.50 (1.65%)
Coal India 173.60 (-0.83%)
Divis Lab. 5149.35 (2.60%)
Dr Reddys Labs 4662.70 (-0.08%)
Eicher Motors 2583.90 (-0.25%)
Grasim Inds 1728.40 (-0.63%)
H D F C 2915.00 (0.12%)
HCL Technologies 1177.15 (0.89%)
HDFC Bank 1642.80 (-0.60%)
HDFC Life Insur. 693.85 (0.55%)
Hero Motocorp 2690.15 (-0.38%)
Hind. Unilever 2396.60 (-1.65%)
Hindalco Inds. 479.85 (-1.28%)
I O C L 130.80 (-0.53%)
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Infosys 1728.95 (1.48%)
ITC 238.45 (0.74%)
JSW Steel 684.90 (-1.36%)
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M & M 886.80 (-0.87%)
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Nestle India 19004.60 (-1.11%)
NTPC 141.30 (-1.33%)
O N G C 157.90 (-3.19%)
Power Grid Corpn 190.25 (-0.08%)
Reliance Industr 2627.40 (-1.26%)
SBI Life Insuran 1186.00 (1.19%)
Shree Cement 28107.75 (1.19%)
St Bk of India 519.15 (1.29%)
Sun Pharma.Inds. 825.10 (1.43%)
Tata Consumer 818.75 (1.22%)
Tata Motors 497.90 (-2.11%)
Tata Steel 1326.15 (-1.30%)
TCS 3489.75 (0.21%)
Tech Mahindra 1567.85 (0.29%)
Titan Company 2460.10 (0.22%)
UltraTech Cem. 7354.20 (1.17%)
UPL 741.50 (3.96%)
Wipro 671.10 (0.44%)

Are You Covered Under Employee Group Health Insurance? You May Still Need An Individual Health Insurance

Are You Covered Under Employee Group Health Insurance? You May Still Need An Individual Health Insurance
by Nutan Gupta 28/07/2017

Suhas is living a normal life; he is a middle-aged man who is working hard for his family. After quitting his previous job, Suhas had a week’s time to start working again at a different company. But unfortunately, before that could happen, he met with a serious road accident. Since he was no longer covered by the Employee Group Health Insurance that was offered to him by his previous company, Suhas’s family is struggling to pay the hospital bills. Things would have been different if Suhas got himself covered with an Individual Health Insurance.

In today's world, having a Health Insurance is a necessity to lead a stress-free life. The various benefits of having a Health Insurance can never be ignored; which includes medical cover, immediate assistance, specialist referrals, tax exemptions and many more. But, one needs to realize that there are many Health Insurances available in the market that are modified to suit everybody’s demands.

Companies offer a mandatory health cover for their employees in order to ensure their well-being. But as an individual, an 'Employee Group Health Insurance' would never provide you with the right kind of health cover.

Features

Group Employee Health Insurance

Individual / Family Cover

Protection when job lost

No

Yes

Protection while changing jobs

No

Yes

Coverage

May not be sufficient as per customer’s needs

Based on customer’s needs

Options to add features NCB, restoration benefits, critical illness

Not available

Available

Limited features like cap on room-rent, doesn’t provide cover for all family members

With restrictions

No restriction



Be Your Own Boss:
Instead of being an option, an Individual Health Insurance is a necessity for every individual. There are multiple reasons as to why an Employee Group Health Insurance is surpassed by the benefits of an Individual Health Insurance.

Independence:
Let us think of an employee who is covered by a group health insurance. And he decides to quit his current job. In such a situation, the employee will no longer be an insurance policy holder if he quits the job. He will anyways have to buy a new individual health insurance that will remain with him as long as he wants that.

Reduced Waiting Period:
In a majority of group health insurance plans, there is a minimum waiting period of 90 days within which no claims will be entertained. Having an individual health insurance exempts you from such delays and provides you health cover right from day 1 in case of an accident. Otherwise, there will be a 30 days waiting period.

Uncompromised Care:
The group covered by health insurance consists of different employees. These may differ according to their designation, the kind of work done or their pay-scale. As a result, the benefit that one gets out of this insurance policy might vary accordingly. By opting for an individual plan, one can insure a higher sum tailored as per his requirements. This ensures an uncompromised care to the insured.

No Claim Bonus:
It is obvious that an employee will receive no claim bonus out of the group health insurance if the policy remains unused until the renewal period. On the contrary, an individual plan provides a guaranteed no claim bonus for the same.

The Common Path
Both the policies require more or less the same number of documents to apply for the claims. The claim form, itemized bills, doctor's report, hospital discharge card and medical papers along with any other scan reports are the documents that one should procure while claiming for an insurance benefit in both the types of policies.

In order to enjoy the cashless mediclaim benefit, one needs to identify which hospital falls under the insurance company's network. After submitting the claim form, that will undergo scrutiny, an approval/ rejection will be mailed accordingly. It is only after this that the TPA will sanction the specified amount for the treatment.

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Discover This Lesser Known Benefit of Your Health Insurance Policy

Discover This Lesser Known Benefit of Your Health Insurance Policy
by Nutan Gupta 28/07/2017

Your insurer offers you a free medical check-up along with health insurance policy. However, most of the people are still unaware or skeptical of availing this benefit. Generally, according to statistics, only 20-25% of the policyholders avail this benefit.

Lack of awareness about this policy feature is one of the major causes of people not availing this benefit. Another doubt that keeps the insured customer from taking up these free check-ups is that they are fearful about a rise in premium if the test results are not up to the mark.

This fear, however, is completely baseless. Medical check-ups have no effect on the premium even during policy renewal. The health check-up will only affect your policy once your test results are not favourable. In thatcase the health check-up is a timely life-saving service.

Free Routine Health Check-ups V/s Paid Health Check-up

Table_for_Discover_ThisLesserKnownBenefit_Revised

How Much Can You Save?
The check-ups generally covered under the health insurance policy include almost every basic check-ups like ECG, complete blood count, fasting blood sugar, lipid profile, urine test and chest x-ray. Some insurance companies specify the amount of free health check-up that one can avail.

When can You Avail Your Free Health Check-up?
Health insurance policies offer reimbursement to a policyholder for a free medical check-up once in every four years. However, things are improving now; but, at a recent trend, it has been seen that many insurance companies are now offering a free medical checkup every year in the policy term.

Check the Terms and Conditions
Various diagnostic centres have different charges, so the policyholder must carefully read the policy document to know how much cost will be reimbursed by the insurer.

Generally, the customer is not asked to pay if the tests are done at a diagnostic centre specified by the insurance company. The insurer pays the centre as per the rates that they have arrived at, after their agreement.

If the tests are done in a non-empanelled centre, the charges are reimbursed upon receipt of the bill based on the payout policy of the insurance company.

Choose An Online Insurance Platform for Clarity
Availing free health check-up depends on company to company. Even once you find a company that offers free health check-ups, it can become a hassle trying to find out the specifics while comparing each of the options at your disposal.

Log on to 5paisa.com where you will be able to compare insurance policies from multiple websites from a single site. We not only help you in buying the policy but also provide insurance advice to help you understand which insurance policy suits your needs.


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5 Stocks for Next Week (July 31-August 4)

5 Stocks for Next Week (July 31-August 4)
by Gautam Upadhyaya 28/07/2017

Repco Home Finance Aug Fut Sell Rs 761-766; Target Rs 718; Stop Loss Rs 804

Repco Homes is trading in a lower top lower bottom chart structure. The stock has given a channel breakdown on the daily chart. We expect the downtrend to continue and recommend a sell in the stock with a target price of Rs 718.

CESC Buy Rs 926-931; Target Rs 984; Stop Loss Rs 887.

CESC has given a flag pattern on the daily chart the breakout has been backed by a surge in volumes. We expect the uptrend to continue and recommend a buy in the stock with a target of Rs 984.

Reliance Capital Buy Rs 712-719; Target Rs 777; Stop Loss Rs 667

Reliance Capital has given a breakout from its sideways consolidation on the daily charts backed by a surge in volumes. The stock has also formed a bullish engulfing chart pattern on the weekly chart. The stock is currently trading at its 52 week high. We recommend a buy with a target of Rs 777.

Kotak Mahindra Bank Buy Rs 1008-1013; Target Rs 1051; Stop Loss Rs 981

Kotak Mahindra Bank is trading in a higher top higher bottom chart structure. The stock has shown good strength on the daily MACD Histogram. Kotak is currently trading at its 52 week high. We recommend a buy with a target price of Rs 1051.

5) Hero Moto Corp Aug Fut Sell Rs 3642-3656; Target 3515; Stop Loss Rs 3767

Hero Moto Corp has given a channel breakdown on the daily chart. The stock is currently trading below its short-term exponential moving average. We recommend a sell in the stock with a target of Rs 3515.

*All prices have been taken based on Friday, 28th July’s closing price.

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Short Put Options Trading Strategy

Short Put Options Trading Strategy
by Nilesh Jain 02/08/2017

What is short put option strategy?

A short put is the opposite of buy put option. With this option trading strategy, you are obliged to buy the underlying security at a fixed price in the future. This option trading strategy has a low profit potential if the stock trades above the strike price and exposed to high risk if stock goes down. It is also helpful when you expect implied volatility to fall, that will decrease the price of the option you sold.

When to initiate a short put?

A short put is best used when you expect the underlying asset to rise moderately. It would still benefit if the underlying asset remains at the same level, because the time decay factor will always be in your favour as the time value of put will reduce over a period of time as you reach near to expiry. This is a good option trading strategy to use because it gives you upfront credit, which will help to somewhat offset the margin.

Strategy Short Put Option
Market Outlook Bullish or Neutral
Breakeven at expiry Strike price - Premium received
Risk Unlimited
Reward Limited to premium received
Margin required Yes

Let’s try to understand with an Example:

Current Nifty Price 8300
Strike price 8200
Premium received (per share) 80
BEP (strike Price - Premium paid) 8120
Lot size 75

Suppose Nifty is trading at Rs. 8300. A put option contract with a strike price of 8200 is trading at Rs. 80. If you expect that the price of Nifty will surge in the coming weeks, so you will sell 8200 strike and receive upfront profit of Rs. 6,000 (75*80). This transaction will result in net credit because you will receive the money in your broking account for writing the put option. This will be the maximum amount that you will gain if the option expires worthless. If the market moves against you, then you should have a stop loss based on your risk appetite to avoid unlimited loss.

So, as expected, if Nifty Increases to 8400 or higher by expiration, the options will be out of the money at expiration and therefore expire worthless. You will not have any further liability and amount of Rs. 6000 (75*80) will be your maximum profit. If Nifty goes against your expectation and falls to 7800 then the loss would be amount to Rs. 24000 (75*320). Following is the payoff schedule assuming different scenarios of expiry. For the ease of understanding, we did not take into account commission charges and Margin.

Short Put Options Trading Strategy

Analysis of Short Put Option Trading Strategy

A short put options trading strategy can help in generating regular income in a rising or sideways market but it does carry significant risk and it is not suitable for beginner traders. It’s also not a good strategy to use if you expect underlying assets to rise quickly in a short period of time; instead one should try long call trade strategy.

 

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Reverse Cash and Carry arbitrage

Reverse Cash and Carry arbitrage
by Nilesh Jain 05/08/2017

Reverse Cash and Carry arbitrage is a combination of short position in underlying asset (cash) and long position in underlying future. It is initiated when future is trading at a discount as compared to cash market price. In other words, the cash market price is trading higher as compared to future. The arbitrageur/ trader can take position by selling his delivery of stocks in cash and simultaneously buying futures of same underlying assets of equal quantity. A trader must have delivery in that particular stock when there is such an opportunity available in the market.

Reverse cash and carry arbitrage occurs when market is in "Backwardation", which means future contracts are trading at a discount to the spot price.

Let’s try to understand with the help example of CEATLTD as on 26th APRIL 2017:

As we can see in the above illustration from 5paisa terminal there was a price difference between cash market price and May futures price of Rs 60.

Cash market price (as on 26th April 2017) (S)

Rs 1570

May Futures (Expiry on 29th May 2017) (F)

Rs 1510

Contract size

700

Rate of Interest

9% (p.a.)

Time to expiry (n)

29 days

Amount received from selling Delivery of CEAT

Rs 10,99,000 (1570*700)

Margin required to sell futures

Rs 1,37,595

Free cash available

Rs 9,61,405

Fair value is measured by the formula

S= F/(1+R)^n

Lending rate

0.72%

Basis

Spot price-Future price

Free cash available to lend will be Rs 10,99,000 - Rs 1,37,595 = Rs 9,61,405

Gain from amount lend is Rs 6,874.71 (9,61,405*(0.09^(29/365)))

S= 1510/(1+0.09)^(29/365)

Fair Value of spot price (S)= 1500

Current spot price= 1570

Hence, we can see that there is an arbitrage opportunity.

Risk free Arbitrage=Rs 70 (1570-1500)

To take advantage from this mispricing, trader/arbitrageur will buy futures at Rs 1510 and sell CEATLTD in cash market at Rs 1570. This would result in gross arbitrage profit of Rs 42,000 (60*700). And income received from lended amount would be Rs 6874.71, so Net arbitrage profit would be Rs 48,874.71.

Scenario analysis:

Case 1: CEATLTD rises to 1620, at expiry

Loss on underlying (cash) = (1620-1570)*700= (Rs 35,000)

Profit on futures = (1620-1510)*700= Rs 77,000

Gross Gain on Arbitrage= Rs 42,000

Inflow from lending: Rs 6874.71

Net gain from arbitrage: Rs 48,874.71

Case 2: CEATLTD falls to 1450, at expiry

Profit on underlying (cash) = (1570-1450)*700= Rs 84,000

Loss on Futures= (1510-1450)*700= (Rs 42,000)

Gross Gain on Arbitrage= Rs 42,000

Inflow from lending: Rs 6874.71

Net gain from arbitrage: Rs 48,874.71

To round up, in any reverse cash and carry arbitrage, the moment you trigger this arbitrage, your profit is fixed depending upon the arbitrage opportunity. This is also called risk free arbitrage because your profit is secured irrespective of underlying price movement.

Whenever future price of an underlying asset are higher than the current spot price, a cash and carry arbitrage opportunity arises.

Next Article

Bear Call Option Trading Strategy

Bear Call Option Trading Strategy
by Nilesh Jain 05/08/2017

What is a Bear Call Spread Option strategy?

A Bear Call Spread is a bearish option strategy. It is also called as a Credit Call Spread because it creates net upfront credit at the time of initiation. It involves two call options with different strike prices but same expiration date. A bear call spread is initiated with anticipation of decline in the underlying assets, similar to bear put spread.

When to initiate a Bear Call Spread Option strategy?

A Bear Call Spread Option strategy is used when the option trader expects that the underlying assets will fall moderately or hold steady in the near term. It consists of two call options – short and buy call. Short call’s main purpose is to generate income, whereas higher buy call is bought to limit the upside risk.

How to construct the Bear Call Spread?

Bear Call Spread can be implemented by selling ATM call option and simultaneously buying OTM call option of the same underlying assets with same expiry. Strike price can be customized as per the convenience of the trader.

Probability of making money

A Bear Call Spread has a higher probability of making money. The probability of making money is 67% because Bear Call Spread will be profitable even if the underlying assets holds steady or falls. While, Bear Put Spread has probability of only 33% because it will be profitable only when the underlying assets fall.

Strategy

Sell 1 ATM call and Buy 1 OTM call

Market Outlook

Neutral to Bearish

Motive

Earn income with limited risk

Breakeven at expiry

Strike Price of short Call + Net Premium received

Risk

Difference between two strikes - premium received

Reward

Limited to premium received

Margin required

Yes

Let’s try to understand with an example:

Nifty Current spot price (Rs)

9300

Sell 1 ATM call of strike price (Rs)

9300

Premium received (Rs)

105

Buy 1 OTM call of strike price (Rs)

9400

Premium paid (Rs)

55

Break Even point (BEP)

9350

Lot Size

75

Net Premium Received (Rs)

50

Suppose Nifty is trading at Rs 9300. If Mr. A believes that price will fall below 9300 or holds steady on or before the expiry, so he enters Bear Call Spread by selling 9300 call strike price at Rs 105 and simultaneously buying 9400 call strike price at Rs 55. The net premium received to initiate this trade is Rs 50. Maximum profit from the above example would be Rs 3750 (50*75). It would only occur when the underlying assets expires at or below 9300. In this case both long and short call options expire worthless and you can keep the net upfront credit received. Maximum loss would also be limited if it breaches breakeven point on upside. However, loss would also be limited up to Rs 3750(50*75).

For the ease of understanding, we did not take in to account commission charges. Following is the payoff chart and payoff schedule assuming different scenarios of expiry.

The Payoff Schedule:

On Expiry Nifty closes at

Net Payoff from Call Sold 9300 (Rs)

Net Payoff from Call Bought 9400 (Rs)

Net Payoff (Rs)

8900

105

-55

50

9000

105

-55

50

9100

105

-55

50

9200

105

-55

50

9300

105

-55

50

9350

55

-55

0

9400

5

-55

-50

9500

-95

45

-50

9600

-195

145

-50

9700

-295

245

-50

9800

-395

345

-50

Bear Call Spread’s Payoff Chart:

Impact of Options Greeks:

Delta: The net Delta of Bear Call Spread would be negative, which indicates any upside movement would result in to loss. The ATM strike sold has higher Delta as compared to OTM strike bought.

Vega: Bear Call Spread has a negative Vega. Therefore, one should initiate this strategy when the volatility is high and is expected to fall.

Theta: The net Theta of Bear Call Spread will be positive. Time decay will benefit this strategy.

Gamma: This strategy will have a short Gamma position, so any upside movement in the underline asset will have a negative impact on the strategy.

How to manage Risk?

A Bear Call is exposed to limited risk; hence carrying overnight position is advisable.

Analysis of Bear Call Options strategy:

A Bear Call Spread strategy is limited-risk, limited-reward strategy. This strategy is best to use when an investor has neutral to bearish view on the underlying assets. The key benefit of this strategy is the probability of making money is higher.