Derivatives - The sophisticated satta market

Had my first class of financial derivatives (FD for short) today. The prof went gaga over how they are instruments for hedging risks as well as their random use for speculation. We were introduced to the various forms of derivatives in the forms of forwards, futures, options and swaps with the introduction session focussed on the first two.

Now we know that futures are exchange traded and have cash settlement as opposed to the forward contracts which are OTC and have physical settlement. But these forwards can be cash settled too if the contract is so made. This means I can enter and speculate on the price of a commodity, the volatility of the stock index, stocks etc. legally to enter into forward contracts with a third party.

So how different is it if I would like to extend the same to the success of India in the T20 world cup or the number of wickets taken, the probable score to be made and so on. Why is it called a satta then? Is it not the form of a futures contract in which I decide the underlying, the price, the mode of delivery as well as the payment date?

Why is speculating on stocks allowed and this termed illegal? And the argument of gambling doesn't hold as that is exactly what you do in stock trading. The future price of the stock is not actually related to the exercise price, it is just a value derived from the current price to which certain risk premiums have been adjusted and in no way reflects the spot price of the day.

So isn't this whole derivative crap a slightly sophisticated gamble??? Let's see what happens in the future classes and whether my doubts are dispelled.....

Three day vacation

Its time for the second year to begin. the registration date given was 10th June which meant that I had to leave on 9th morning to make it on time or else pay a Rs.1000 fine/day.

The flight was full with around 15 of our Komrades on the same flight and so after a lot of harrowing i managed to get my ticket. A 6 hour journey which took us 7 hrs for the flight we were made to sit in the plane for an hour (Delhi's traffic is not just confined to the roads). And above it my book got lost or apparently stolen by the security at Coimbatore who made away with it thinking it to belong to some transit passenger....

So we finally reached K around 3 and made for our supposed new hostel. But the hostel is just not complete. Our whole floor is unfurnished and so we were left to choose rooms on a fist come first serve basis to spend the night and hope for studcon to resolve the matters the next day. The best thing about the room though are the working AC's.

The next day we were hopin to have our registrations done, collect the books and start our classes, but when we saw the timetable it was just *$#^@**. My classes were not supposed to begin before Saturday, givin me 3 days to just rest and relax in my new room which is no less than that of a 5 star hotel ( wish I had a camera to show u all the pics). Just collected and transferred all my stuff from the old hostel which took around 4 trips of carrying the heavy stuff.

But the three days after that were pure bliss. Sleepin for 12 hrs a day, with not an ounce to worry about the studies and stuff. Just relaxing in the beautiful Kerala and having the vacation that I hoped of enjoying through my internship. Ahh its great..

Too bad the classes start tomorrow which also means an end to all the weekends which I am supposed to have

The last day...

Thankfully it is here....

After having to go through that ordeal for the pst two months, was just waiting for the day to come...

Working the ass off on even Saturdays....

Having regular late nights...

Not being able to catch a proper nap in office after the day my VP saw me sleepin..

Thanx to doc for being there, so I could atleast roam a bit around Bangalore, else would have lost the opportunity to see the beautiful city and just spent my time lazing around in the room (that is exactly what i did after doc left)

Just can't wait to get to Delhi and spend the 4 precious days with my family and then life returns back to the luxury @ K

Missed K like hell...........

Its 3 in the morning now. Just had 5 mins of sleep in b/w but the excitement of going back is acting stronger than caffeine.....

another 3.5 hrs here and the smile on my face widens.