Options Buying vs Selling: Which Strategy to Use?

Selling Every transaction, right from the days of the Barter system always has had a counterparty. Every seller got to have a buyer to consume the supply. Similarly, in Options too, every option buyer needs to have a counter option seller willing to give his right on the underlying asset.

Selling

An options buyer is one who is willing to pay a premium in advance, for having a right to buy/sell (depending on Call/Put) underlying asset on expiry. And an option seller is one who receives a premium as a fee for surrendering his right on Asset till expiry.

Benefits of Options Buying

  1. Options give you the power of Leveraging, as with limited capital one is able to ride the bigger move.
  2. The Risk involved here is to the tune of Premium paid. Say, if someone is buying a Nifty call option by paying a premium of 40. And a Nifty lot consists of 75 units. Therefore, the total premium paid will be equal to 40*75 = Rs. 3,000. So, by paying a premium of Rs. 3000 one is able to ride the full move.
  3. The option buyer has the opportunity of earning unlimited profit by just paying a premium and the loss is limited to premium invested.

Benefits of Options Selling

To understand this, let us understand the scenarios option contracts move to at expiry:

  1. When the Spot price moves above the strike price at expiry, the option expires In The Money. Options buyers gains and makes money.
  2. When the Spot price is at or near the strike price at expiry, the option expires At The Money. The Option seller earns the premium received as his income as the contract expires worthless for the buyer.
  3. When the Spot price is below the strike at expiry, the option expires Out Of Money. The Options sellers earns the premium received as income as the contract expires worthless for buyer.

So, from the three scenarios mentioned above, the Option Buyer makes money in one of the scenarios and the option seller stands to make money in two scenarios.

Take for example if the Nifty spot is trading at 9325, and the option buyer buys weekly call option of 9400 by paying a premium of 120, then the

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— Calculation for In the Money Call option P/L

  • Spot price at Expiry: 9700 (Say)
  • Premium: 120
  • Strike Price: 9400
  • Profit for Option Buyer: (9700-9400-120)*75 = Rs. 13,500
  • Loss for Option Seller: Rs. 13,500

— Calculation for At the Money Call option P/L

  • Spot price at Expiry: 9405 (Say)
  • Premium: 120
  • Strike price: 9400
  • Loss for option Buyer: (9405-9400-120)*75 =Rs. 8,625 loss
  • Profit of Option Seller: Rs. 8,625

— Calculation for Out of Money Call option P/L

  • Spot price at Expiry: 9275 (say)
  • Premium: 120
  • Strike Price: 9400

Here, loss for option Buyer: (9275-9400-120)*75 = Rs. 18375 loss. But the maximum loss for an option buyer is to the tune of premium paid. So the maximum loss to Option Buyer in Out of Money Call option is Rs. 9000

Margin Calculation

There is no Margin required to buy an option. Just the premium is required to be paid to option seller. Say, to buy a Nifty call option, the premium required to be paid is 40. Then, the total premium to be paid will be = 40*75 = Rs. 3,000.

But in case of selling options, margin along with exposure has to kept with the broker, to account for day to day volatility. The margin is required to be deposited here because seller of an option is exposed to unlimited risk.

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Which strategy to use?

There is no straight answer as to which is better: Buying or Selling. Each have their own benefits and negatives:

1. In case of buying, the buyers risk is limited to premium paid and in return, he gets right on underlying asset till maturity. But selling has its own benefit of receiving income (premium) beforehand and have to pay anything only if the spot price goes above the strike price. Even in that case also the seller has the protection of premium beyond strike price. Therefore, the real loss for seller happens (in case of call option) when: (strike price + premium) < spot price.

2. The option buyer is always in the game to make money, as long as the option does not expire but his probability reduces as the contracts keep moving closer to expiry. And option seller is always exposed to unlimited risk but his risk reduces with time because of less time for the individual assets to make substantial movement in a particular direction.

3. Both option buyers and sellers have the option to exit their trades before expiry. If the option buyer sees that the premium of his position is more than what he paid and he wants to book profit, he can easily do that via options market. And similarly, the option seller can get out of his position if he sees a substantial move of premium in his favour or sees a position going against him.

Closing Thoughts

From the above discussion, we can easily conclude by saying that there is no right strategy as to buying or selling options. And there are arguments both in favour and against options buying vs selling.

What is India VIX? Meaning, Range, Implications & More!

Ever heard of India Vix? If you’re involved in the market for some time and particularly active in the share market in March-April 2020, then I’m sure that you would definitely have come up with this term “India Vix” at least a couple of times mentioned on different financial websites and channels.

Range

In this post, we are going to discuss, what exactly is India Vix, it’s meaning and how exactly it is important for the traders and investors to understand this term.

What is India Vix?

India VIX is a short form for India Volatility Index. It is the volatility index that measures the market’s expectation of volatility over the near term. In other words, it explains the annual volatility that the traders expect over the next 30 days in the Nifty50 Index.

The India VIX value is derived by using the Black & Scholes (B&S) Model. The B&S Model uses five important variables like strike price, the market price of the stock, time to expiry, the risk-free rate, and the volatility. India VIX was introduced by NSE in the year 2008, but the concept of VIX is a trademark of CBOE (Chicago Board Options Exchange).

One simple way of understanding India VIX is that it is the expected annual change in the NIFTY50 index over a period of 30 days. For example, if the India VIX is currently at 11, this simply means that the traders expect 11% volatility for the next 30 days. Further, say, if the current index is trading at 9,000 and India VIX trading at 20. So, expected volatility over next year over 30 days will be:

  • Index spot: 9000
  • India Vix: 20
  • The expected downside for the year = 9000 – 20% of 9000 = 7200
  • The expected upside for the year = 9000+ 20% of 9000 = 10,800

Here, the expected range for the year is between 7200 and 10, 800

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Why is India VIX so important?

All the major directional moves in the market are usually preceded by a lot of choppiness or a lot of range play in the market. India VIX plays a very major role in understanding the confidence or fear factor amongst traders.

A lower VIX level usually implies that the market is confident about the movement and is expecting lower volatility and stable range. A higher VIX level usually signals high volatility and lower trader confidence about the current range of the market. A major directional move can be expected in the market and a quick broadening of range can be expected.

For example, during the sub-prime crisis, India VIX was trading at 55-60 (high of 90) levels and the market was in a state of panic and indecisiveness and hence the moves were erratic and hostile. Volatility and India VIX have a positive correlation. High volatility indicated high India VIX and vice-versa.

Is there an ideal range for India VIX?

Theoretically speaking, VIX ranges between 15-35. But there have been outliers case of as low as 8(very tight range) and as high as 90 (extreme volatility). If VIX moves close to Zero, then theoretically either the index can double or come to 0. However, usually, VIX has a tendency to revert back to mean.

The figure above is India Vix chart for the last 10 years. With the current global crisis of COVID-19, the global markets have faced a lot of heat and extreme volatility and all the major global indices have lost nearly 40% from their recent highs and Indian equity market is no exception. With this current level of volatility, India VIX had climbed up to all time high levels of 90 for a couple of days.

And it seemed to be stabilizing near 50 levels about a month ago. The Vix range is still on the higher side, to attain some stability in the market. For stability to return, the global factors will have to improve and the India Vix level should ideally come around 20 levels.

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What do these extreme Vix levels mean for Options Writers?

India VIX also plays a very major role in the pricing of Options. A higher India Vix levels usually signal more volatile prices for options and a stable range would mean that the options are priced reasonably cheaper.

Simply put, high VIX levels expose option writers to unlimited risk with limited rewards (Premium). A deep in out of money Put/Call option can become at the money or even In the money option in a matter of a couple of trading sessions.

Summary

To summarize, it can be said that India Vix is a silent yet very effective indicator to gauge the range play for Index, which in turn gives us a clear view of the expected movement of the share price.

Historically, large Vix levels have always been followed by a large movement in the indexes and share prices. And even the option pricing, the premiums charged also increase or decrease because of the Vix level changes.

How to do Fundamental Analysis on Stocks?

Fundamental analysis of a stock is used to determine the financial and business health of a company. It is always recommended to perform a proper fundamental analysis of the stock before investing if you are planning for long term investment.

If you’re involved in the market, you might also have about the term ‘Technical Analysis’. Well, technical analysis is a good approach to find the entry and exit time stock for intraday trading or short term. You can make good profits using different technical indicators efficiently. However, if you want to find a multi-bagger stock to invest, which can give you good returns year after year, then the fundamental analysis is the actual tool that you have to utilize.

Fundamental This is because to get multiple times returns (say 5x or 10x), you need to remain invested in a stock for the long term. While the technical indicators will show you exit signs in the short term whenever there’s a downtrend or small setbacks, however, you have to remain invested in that stock if the company is fundamentally strong. In such cases, you have to be confident that the stock will grow and give good returns in the future and avoid short-term underperformance. Short-term market fluctuations, unavoidable factors, or mishappenings won’t affect the fundamentals of the strong company in the long term.

In this post, we are going to discuss how to do fundamental analysis on stocks. Here, we will elaborate on a few guidelines that if you follow with discipline, you can easily be able to select fundamentally strong companies.

How to do fundamental analysis on stocks?

Here are the six essential steps that you need to perform to analyze the fundamentals of a company in Indian stock market. They are really simple, yet effective to find fundamentally healthy companies. Here it goes:

Step 1: Use the financial ratios for initial screening

There are over 5,500 stocks listed in the Indian stock exchange. If you start reading the financials of all these companies (i.e. balance sheet, profit-loss statement, etc.), then it might take years. The annual reports of most companies are around 200-300 pages long. And it’s not worth your time to read each and every company’s report.

A better approach is first to shortlist a few good companies based on a few criteria. And then to study these screened companies one-by-one to pick the one that suits you the best.

For the initial screening of the stocks, you can use various financial ratios like Price to Earnings (PE) ratio, Price to Book Value (PBV) ratio, ROE, CAGR, Current ratio, Dividend yield, etc. If you want to know more about best financial ratios for screening, here’s an article on 8 Financial Ratio Analysis that Every Stock Investor Should Know. In short, you need to use different financial ratios for initial screening.

Next, for performing the stock screening using financial ratios, you can use different financial websites like Screener, Investing.comTickertape, etc. Let me give you an example of how to screen stocks using Investing.com.

How to do a screening of stocks using Investing.com?

Step 1: Go to Investing.com

Step 2: From the top menu, select Tools -> Stock Screener

Step 3: Add Criteria (financial ratios) to screen stocks

For example, if you want to filter companies with PE ratio between (5, 18) and dividend yield % between (1, 3), you can select the following criteria. Investing.com Screener will shortlist the stocks according to the criteria mentioned and give you the list of companies.

Further, you can also add a number of financial ratios in your criteria like CAGR, ROE, etc.

Besides, you can also use other financial websites to screen stocks as mentioned earlier. Here’s a demo on how to shortlist companies using Screener.in website:

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Step 2: Understand the company

Once you’ve screened the companies based on the above criteria, the next step is to investigate them. It is important that you understand the company in which you are investing. Because if you don’t, you won’t be able to decide whether the company is performing good or bad, whether the company is making the right decisions towards its future goal or not; whether their competitors are doing good or bad compared to them and most importantly whether you should hold or sell the stock.

Therefore, it is essential that you understand the company. Questions like what are its products/services, who are leading the company (founders/promoters), management efficiency, competitors, etc should be known to you.

A simple way to understand the company is to visit its website. Go to the company’s website and check it’s ‘ABOUT’, ‘PRODUCTS’, ‘PROMOTERS/BOARD OF DIRECTORS’ page, etc. Read the mission and vision statement of that company. Further, if you can find the annual report of the company, download and read it. This report will give the in-depth knowledge of the company.

Further, if you are able to understand the products, services & vision of the company and find it attractive, then move further to next step. Else, ignore that company.

Step 3: Study the financial reports of the company

Once you have understood the company and found it appealing, next you need to check the financials of the company like Balance sheet, Profit loss statements, and cash flow statements.

As a thumb rule, Revenue/Sales, net profit, and margin increasing for the last five years can be considered a healthy sign for the company. After that, you also need to check the other financials like Operating cost, expenses, assets, liabilities, etc.

Now, where can you find the financials of a company that you’re interested to invest? One of the best websites to check the financial statements of a company that I most frequently use is SCREENER. Here are the steps to check the financial reports of a company on Screener website:

Step 1: Go to screener.in

Step 2: Enter the company’s name in the search box. The company’s details will open like charts, analysis, peers, quarters, profit and loss, balance sheet, etc.

Step 3: Study the company’s financial reports for the last 10 years.

It is required that you study the financials of the company carefully in order to select a good stock for long term investment. If you do not know how to read the financials of a company, you can check out this financial statement and ratio analysis course for beginners.

Step 4: Check the debt and Red Flags

The total debt in a company is one of the biggest factors to check before investing in a stock. A company cannot perform well and reward its shareholders if it has a huge debt. They have to repay the debt and also pay interest on the borrowed money before anything else.  In short, avoid companies with huge debts.

As a thumb rule, always invest in companies with a debt/equity ratio of less than one. You can use this ratio in the initial screening of stocks or else check it while reading the financials of a company.

In addition, also other red flags in the company can be continuously declining profit/ margin, low liquidity, and pledging of shares.

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Step 5. Find the company’s competitors

It’s always good to study the peers of a company before investing. Determine what this company is doing that its competitors aren’t.

Further, you should be able to answer the question that why you are investing in this company and not any of its competitors. The answer should be convincing one like Unique selling point (USP), Competitive advantage, Low-cost products, Brand Value,  future prospects (upcoming projects, new plant), etc.

You can find the list of the competitors of the company on the Screener website itself. Just enter the stock name in the search box and navigate down. You will find a peer comparison there. Else, you can do a google search to find the competitors of the company. Study the competitors in detail before investing.

Step 6: Analyze future prospects

Most good investments are based on the future aspects/potential of the company and hardly on their current situation. Investors are interested in how much returns they can get from their investments in futures. Therefore, always invest in a company with strong long future prospects. Select only those companies to invest whose product or services will still be used twenty years from now.

Moreover, there is no point in investing in a CD or pen-drive making company with no long term (say 10 years from now) prospects. With cloud drives evolving so fast, these products will become obsolete with time.

If you are planning to invest for the long term, then the long life of the company’s product is a must criterion to check. Further, check future prospects, expansion possibility, potential sources of revenue in the future, etc.

Summary

Fundamental analysis is an old and proven method to find strong companies for long term investment. In this post, we discussed how to do the fundamental analysis of stocks.

The six steps to perform fundamental analysis on stocks explained in this article are: 1) Use the financial ratios for initial screening, 2)Understand the company, 3) Study the financial reports of the company, 4) Check the debt and red signs, 5) Find the company’s competitors 6) Analyse the future prospects.

What are Penny Stocks? And Should You Invest in them?

Invest Penny stocks are the darlings of new investors. The low market price of these stocks makes them quite attractive to beginners. However, there are a number of things that an investor should know before investing in penny stocks.

Invest

In this post, we are going to discuss penny stocks, their pros and cons, and whether an investor should buy it or not.

What are Penny stocks?

Penny stocks are those stocks that trade at a very low market price, generally with a share price less than Rs 10. These stocks have a very low market capitalization and typically under Rs five hundred crores.  Further, penny stocks in Indian stock market have low liquidity and are speculative in nature.

Being smaller than Small-cap companies, these stocks belong to the microcap category. However, you can find a number of penny stocks in India listed on both the Bombay stock exchange (BSE) and National stock exchange (NSE).

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PROS of Penny stocks

Penny stocks have a high potential of rewarding its shareholder. The returns are quite high if you are able to get a good penny stock. Many penny stocks have turned out to be multi-baggers for their investors.

These stocks are able to make explosive moves. There are a number of penny stocks that have given multiple times returns in just a few months. Moreover, due to the low market price of these stocks, investors are able to buy large quantities of penny stocks.

Generally, penny stocks are not known to many as retail investors do not have information about these stocks and the institutional investors do not invest in these companies because of their low market capitalization. Therefore, if you are able to find one such stock before the market does, then it can turn out to be a great wealth creator for you.

CONS of Penny stocks

The cons list of penny stocks is too large compared to its pros. Here are few of common disadvantages of buying penny stocks:

  1. High Risk: These stocks are quite risky as the percentage of a number of penny stocks outperforming the market are quite less. Many of the penny stocks become bankrupt and go out of the business.
  2. These stocks have very low liquidity. Therefore there will be troubles on both ends of transactions i.e. buying and selling. While buying these stocks, you might not be able to find a seller. In case you bought the stock, and the stock price starts falling, then you won’t be able to find a buyer to sell the stock.
  3. There is a large bid-ask spread in these stocks.
  4. Limited information is available to the public about the company.
  5. Price manipulations: There have been a number of cases of price manipulations in penny stocks where the insiders try to inflate the share price. Further, one can easily manipulate the penny stocks by buying large quantities of these stocks.
  6. Sudden delisting and regulatory scrutiny: There are multiple cases where penny stocks have been delisted from the stock exchanges. Further, these stocks are regularly under the scrutiny by SEBI.
  7. Prone to scams: There are a number of past scams in penny stocks (Ex- pump and dump).

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Who should buy penny stocks?

Penny stocks are suitable for those investors who are ready to take high risks in expectations to get high returns. If you have a low-risk appetite, do not invest in these stocks.

Rules for investing in penny stocks

Here are the few guidelines that can help you to invest in penny stocks.

  1. Look for value, not just the price: Even for penny stocks, you need to look at the value the company is giving. Understand the company’s business, product, services, etc. Investing in penny stock is not buying a lottery ticket.
  2. Study the company’s fundamentals: Look at the company’s financials, management, debt, growth rate, etc
  3. Check the liquidity: Buy stocks that have reasonably high trading volumes so that there is ample liquidity.
  4. Promoter’s share and pledge: Check the promoter’s shareholding patterns and stock pledge if any.
  5. Technical factors: If you know technical analysis, then also check the penny stock’s technicals. Moreover, if you’re purchasing penny stocks just for quick returns, do not ignore looking into factors like momentum, technical indicators like moving averages, RSI, etc.
  6. Invest only a small portion of your investment in penny stocks: As these stocks have a high risk, you should only invest a small amount, less than 10% of your total investment amount in penny stocks.
  7. Monitor continuously: Penny stocks are very volatile. As these stocks are known to make explosive moves, therefore monitor these stocks continuously. If the stocks are performing well, buy more. If they are continuously performing poorly, get rid of it.
  8. Do not diversify: As you are only investing a small proportion of the amount in these stocks, diversifying will make the net investment even smaller. Select only 2 or 3 penny stocks and invest in them.
  9. Be disciplined: Do not invest all in if your penny stocks start performing tremendously good. Similarly, do not quit if one or two of your penny stocks failed to give satisfactory returns.
  10. Do not believe ‘it cannot go down any further’ myth. If the prices of the stock are falling, try to find the reason behind it.

Conclusion

While there are a number of peoples who have created huge wealth by investing in penny stocks, however for many penny stocks are wealth destroyers. If you are going to invest in penny stocks, do your research carefully and do not speculate about the stock. Moreover, there are high risks involved in these stocks. So, be ready for it.

7 Best Stock Market Discussion Forums in India

Market One of the easiest ways to learn anything new is by participating in the discussions. And the same rule applies when you are trying to learn trading or investing. If you are new to stocks and looking for the best stock market discussion forums in India to start participating, then you’ve entered the right page.

Market

In this article, we are going to share the list of seven best stock market discussion forums in India where you can ask your most troublesome questions or share your ideas/knowledge with fellow investors and traders. On all these forums, you can find active discussions on stock market investing, trading, investing strategies, stock picks, IPOs, mutual funds, taxation, personal finance and more.

Besides, all these forums are FREE to join and hence, it doesn’t cost you anything to signup and start participating in interesting topics on these Indian stock market discussion forums.

7 Best Stock Market Discussion Forums in India

Here are seven of the best forums in India for healthy discussions on stock market investing and trading:

1. Traderji

Started in 2004, Traderji is one of the oldest and most popular stock market discussion forum for investors and traders in India.

This platform has over 1.8 lakhs members participating in different threads on the stock market, derivates, Commodity and Forex trading of India. As per the statistics on this website, there are over 59,300 threads and 1,202,464 messages on this forum.

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2. Trading Q&A

Trading Q&A is a famous online discussion platform for traders and investors which is managed by Zerodha, the biggest discount broker in India. With thousands of active participants on this forum, you can get all your trading queries answered here, along with sharing your own knowledge with fellow traders.

On Trading Q&A, you can ask questions about Intraday Trading, Derivatives, Commodity, Investing Strategies, Broker Review, Algo-Trading, Zerodha & its products, Taxation, IPOs and much more.

3. Trade Brains Discussion Forum

Trade Brains discussion forum is an online forum for the community of enthusiastic stock market investors and traders who are willing to learn, ask, and share their skills, thoughts, and knowledge. This forum has been listed among the top 9 Online Forums To Discuss Personal Finance and Trading in Asia by Fintech Singapore News.

On Trade Brains’ forum, you can find discussions on categories belonging to Share market investing and trading, fundamental analysis, mutual funds, IPO’s, personal finance and money management.

Here, you can participate in the forum for free by reading/writing the answers on the existing queries or asking your own questions by simply signing up for the forum.

4. ValuePickr Forum

One of the most active forum for stock market discussion in India. ValuePickr’s tagline is “Separating the Wheat from the Chaff” and focuses on discussions regarding the company’s Business Quality, Management Quality, Business Execution & Performance.

Here, you can find topics on stock opportunities (hidden gems, Untested but worth a good look category, top 5 picks), Investing strategies, Questions & Answers, Investor Toolkit, Investment Learning, Books and more. You can get a lot of knowledge about the Indian stock market by simply hovering over the topics and queries.

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5. Stock Adda

Stock Adda is an Indian stock investor community where along with the stock market discussions, you can also get information like stock ideas, investing strategies, news, market movements, books, etc.

Besides, on StockAdda, you can also create a stock portfolio or view the ranking of member portfolios based on Daily and overall gains(%). Overall, it is an amazing platform for social traders/investors.

6. Rakesh Jhunjhunwala Forum

Stocks Talk Forum by Rakesh Jhunjhunwala is yet another popular stock market discussion forums in India.

First of all, I should mention that this site is Inspired, Not Endorsed, By Rakesh Jhunjhunwalaone of the most successful Indian stock market investors.

On this discussion forum, you can find topics on categories like stock investment queries, stock picks of wizards, portfolio of famous investors, stock advisory services, must-read interviews, articles and more. You can find over 3,250 discussions on this forum.

7. Bse2Nse

Bse2Nse is another popular Indian Stock forum discussion for Equity, FnO, and commodity trading. Here you can find discussions on stock trading, investing strategies, broker reviews, IPOs, mutual funds and more. They also have a separate section on Chart Analysis which can be very helpful for technical traders.

Closing Thoughts:

In this article, we discussed the seven best stock market discussion forums in India. However, before ending this article, let me give you a piece of final advice.

All these forums are built by active members who are willing to share useful ideas and answers. Please keep your posts relevant to the forum category and do not ‘SPAM’! Else, you will be thrown out of the forum by the admins and moderators. Be respectful to others and don’t sweat the small stuff.

Top 10 Google AdSense Alternatives

A lot of people never got accepted to Google AdSense because Google has strict terms and conditions. But don’t be upset because there are so many AdSense alternatives. They do not pay as much as Google but they offer you to make a decent income through PCC advertising program.

So, simply join bellow sites and monetize your website

  1. Ad Brite
    It is one of the best Google’s AdSense alternative. It has more relaxed terms and conditions then AdSense and is much more accepting of smaller publishers like bloggers. The revenue of Adbrite is typically split 75/25 ratio. The minimum payout of Adbrite is also low, it is only $5. But AdBrite not allow PayPal payment.
  2. Clicksor
    Clicksor is another good alternative of AdSense. Cost per click bid values are high enough in Clicksor so you can earn a decent income. Clicksor also allow you to add as many sites or domains as you want under a single account. For payment Clicksor allow both PayPal and Check. For PayPal minimum payout is only $20 and for check that is only $50.
  3. BidVertiser
    Some expert bloggers say that Bidvertiser is the best Google AdSense alternative for Asian bloggers. It claims itself that it will always display the highest bidders on your site, assuring the maximum revenue possible at any given time. BidVertiser pay you by PayPal with minimum amount $10 or by check with minimum payable amount $50.
  4. Chitika
    Chitika is very famous in some article directories. It doesn’t really stand alone as a single advertising solution but instead provides you with a way to compliment your existing advertising and publishing program with some additional Ad units which are altogether different from the standard ad boxes, pop unders etc. Chitika runs helpful blog and forum for their publishers. Further chitika has a good referral program. For payment chitika prefer check but it also accepts PayPal payments method. The minimum payout threshold of Chitika is $20.
  5. ExitJunction
    It is a good AdSense alternative. Its unique program is it monetizes 100% of your traffic because it pays for your international traffic whether you have traffic from the US, UK, Canada, China or India, it will pay for it all. ExitJunction also has a good referral program. You will get paid 10% earning of your each referral for life time. It offers fee free payout via check or PayPal with minimum earning amount $25.
  6. AdToll
    AdToll has a great user interface and navigation through the user panel. It has a newest Ad technology. It campaigns both graphic and text ads. AdToll delivers payment both PayPal and Check. Minimum payout threshold for PayPal is only $20 and for Check that is $40.
  7. eClickZ
    it provide customized Ad Units to its publisher. Publisher can take advantage of global traffic and the great thing about this site is it provides personal account managers which are ready to answer the questions you may have help you achieve maximum revenues. eClickZ pays only by PayPal and the minimum payout threshold is only $10.
  8. Microsoft Pub Center beta
    It provide text ads for display on web pages, with a wide variety of design and reporting features. Publisher can control what ads appear on his blog. This site not allow PayPal payment method, it pays only by check. And the minimum payout threshold is only $50.
  9. Yahoo Publisher Network
    It’s seemed like a copycat of Google AdSense. It is an alternative of AdSense but it has same restricted terms and conditions like AdSense. Good point is you will be integrated other Yahoo services, including Add to My Yahoo (RSS). Payment methods are both PayPal and check.
  10. Infolinks
    Infolinks presents the next generation of in-text advertising, means ads are tightly integrated with content; you don’t need any additional space. It claims itself that it is leading the industry with the most relevant in-text advertising links and the highest revenue share. Payment method is PayPal and minimum payout threshold is $100.



Source by Alan Sahu

Delisting of Shares – Here’s what you need to know!

With the latest news of Vedanta delisting plans buzzing in the market, a lot of investors are confused about what delisting of shares actually means and why companies go for delisting. Moreover, investors are worried about what happens to the shareholders once the company gets delisted from the stock exchange.

Delisting

In this article, we take a look at the delisting of shares and will try to demystify most of the frequently asked questions and facts around it

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What is Delisting of Shares?

Delisting refers to a listed company removing its shares from trading on a stock exchange platform. As a consequence of delisting, the securities of that company would no longer be traded at that stock exchange. The company will now be a private company.

A long as the stock is traded in one of the exchanges that are made available to investors throughout the country it is considered as a listed stock. Anyways, if a company is listed in multiple stock exchanges in a country and decides to stop trading from just one of the exchanges, it is not considered as delisting. However, if it removes its shares from all the stock exchanges barring people to trade, then it is considered as delisting of shares.

Types of Delisting

If we try and figure out why a company is getting delisted the reasons can be grouped into two categories.

1.  Voluntary delisting

Voluntary delisting occurs when a company decides on its own to remove its securities from a stock exchange. The company pays shareholders to return the shares held by them and removes the entire lot from the exchange.

Voluntary delisting generally occurs when the company has plans to expand or restructure. At times a company may be acquired by an investor who is looking to hold a majority share. This share may be greater than that permissible by the government. In India, it is mandatory that at least 25% of the shareholding be available to the public. An acquirer who wants over 75% of holdings may expect the company to go private and hence delist. At times the company is also delisted to allow the promoters a greater share.

The exchange regulations may also be a cause for voluntary delisting.  This is because companies may find it difficult to comply with regulations as they may hinder their functioning. These companies would prefer to delist.

Existing shareholder approval for delisting

A delisting that is of voluntary nature can only occur if shareholders holding up to 90% of the share capital agree to the delisting offer made by the company. The shareholders at times may not agree to delist. if they foresee a rise in the price of the shares or are not happy with the current offer made by the company to buyback the shares as they feel the shares are worth much more. A delisting process may take years to complete hence the shareholders get ample time.

2. Involuntary or Compulsory Delisting

In the case of involuntary delisting, the company is forced by the regulatory authority to stop its shares from trading.  This is also used by the regulatory authority to penalize the company. The investors do not have the opportunity to vote against the delisting in this case.

Here are the Grounds for the company being compulsorily delisted:

  1. Failure to maintain the requirements set by the exchange
  2. The shares of the company being suspended from trading for more than 6 months or being traded infrequently over the last three years
  3. Bankruptcies, where the company has posted losses for the last three years and has a net worth which is negative

Here, the Promoters are required to purchase the shares from the public shareholders as per a fair value determined by an independent valuer.

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Voluntary Delisting process

Assuming that promoters, shareholders, and the company’s board of directors agree, the delisting process will take a minimum of 8-10 weeks from the date of announcement of the shareholder meeting to approve the delisting proposal. Here are the steps involved in voluntary delisting of stocks:

1. Appointment of a Merchant Banker

Once the board takes the decision to delist the first major step is appointing an independent merchant banker. A merchant banker overlooks the Reverse book building process. Reverse book building is the process by which a company that wants to delist from the bourses, decides on the price that needs to be paid to public shareholders to buy back shares. Here, it has to follow a detailed regulatory process.

2. Initiate the Reverse Book Building Process through online bidding

The merchant banker oversees the Reverse book building process. It is the process used by the company to set a price that is used to attract the investors into agreeing to the delisting. In this process, the shareholders bid online the prices at which they would be willing to sell the shares. The reverse book building process is used only in India.

To protect the investors the SEBI has also set a floor price which is the minimum the company can offer to the shareholders. The floor price should be the average of weekly closing highs and lows of 26 weeks or of the last two weeks, whichever is higher.

3. Set up Escrow Account before offering terms of delisting to public

To ensure that the company has the ability to purchase the shares from the shareholders it is required to create an account specifically for this purpose. This account is known as an Escrow account. The amount in the escrow account will only be used towards delisting.

4. Gaining Shareholder Approval

Once the merchant banker receives the prices he makes an appropriate offer to the shareholders in the form of Offer Letters sent by post. The shareholders may or may not accept the offer. The company has to gain the approval of over 90% of the shares of all the shareholders. To acquire this approval what the company does is, make an offer to the existing shareholders to buy the shares from them at a premium. The shares must be bought back by the company at a price that is equal to or higher than the floor price.

Say a situation arises where 25% of the shareholders do not participate in the book-building process. Here as long as it can be proved that the offers were delivered to the shareholders by registered or speed post and the delivery status can be confirmed, the shareholders will be deemed as compliant to the divesting of the company.

If 90% of the shareholders agree to the prices and the companies decision to delist then the company can go ahead and delist from the stock exchange.

What happens to shareholders who refuse to sell?

If investors do not take part in the reverse book building process they still have the option to sell their shares back to promoters. It is mandated that the promoters accept the shares. The price here would be the same price exit price accepted from the reverse book building process. The shareholders will be allowed to do this for one year from the date of closure of the delisting process.

If a shareholder still doesn’t sell the shares back within a year he will end up holding non-tradable securities. Shareholders do this in cases where they expect the company to begin trading publicly again after a period. The shares of the shareholder, however, will still be affected by all corporate actions taken by the company.

The Telecom War in India – Jio, Airtel, Vodafone?

In the pre-liberalization period, there existed only state-owned companies like BSNL. The operations of these companies can be dated back to the British era. Post the liberalization the government began issuing licenses to private players in exchange for a license fee.

Telecom

This license fee set, however, was in accordance with The Telegraph Act of 1885 set to govern the state players. The private telcos found it hard to adhere to this and constantly defaulted on the fee payments.

Noticing this the government introduced the National Telecom Policy in 1999 where the telcos were given the option to either pay the existing license fee or share a percentage of their revenue which was called AGR ( Adjusted Gross Revenue).

— The More the Better

During this period the government believed that the greater the number of players the greater the benefits the consumers would receive. This has bought up to 16 players in the telecom industry. This, however, ended up doing much more harm to the industry due to the competitive pricing practices followed by the telcos to emerge as the top players.

— AGR Dispute

During this period the Department of Telecommunications (DoT) entered into legal disputed with the players. If must be noted that Revenue meant that any income received by the company irrespective of it making profits or losses. The companies agreed to pay AGR assuming that the revenues to be paid would be from the core(telecom related) activities of the industry. The DoT argued that a percentage of the revenue from all sources ( core and non-core) is to be paid.

This involved installation charges, value-added services, interest income, dividend, and even profit on the sale of assets, insurance claims, and forex gains. This meant that the telcos now owed 1.47 Lakh crore in AGR to the DoT. Other government entities like TRAI (Telecom Regulatory Authority of India) and TDSAT (Telecom Disputes Settlement and Appellate Tribunal) also voiced their concern over this claim.

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— Enter Jio: A Mukesh Ambani Offering

These troubles in the telecom industry seem monumental and we have not even considered other factors like the 2G scam that took place. The worst, however, was yet to come for the telcos. In 2016, a new player Jio entered the industry. The predatory pricing strategy followed by Jio offered consumers 4G data for free. This further put tremendous stress on the telecom industry.

When Reliance Jio entered the markets in 2016 there were up to 7 telcos who had a substantial footing in the industry. By the end of 2019, there were only 3 other companies competing. Out of the three only Jio was profitable by extremely slim margins and airtel running but on losses. Vodafone and Idea too in losses were barely surviving the pricing onslaught.

— Spectrum Dues

Apart from the AGR the telcos also owe the government dues from spectrum allocation auctions. The telecom industry makes the use of electromagnetic waves that are made available through a spectrum. Hence a spectrum is considered a national resource and allocated carefully by the government. The spectrum allocation charges are paid in installments to the government. With the telcos already in debt, they further started defaulting on these too.

Finance Minister Nirmala Sitharaman announced a moratorium on these installments for 2 years. But the moratorium provided by the government does not come interest-free as they will still have to pay additional interest accrued during the 2 year period. Airtel currently owes Rs. 11,476 crores on its installments with Vodafone Idea owing Rs. 23920 crores.

Telecom War in India: Current Scenario

All sympathies do not lie with the telcos. Prior to the Jio’s entrance, the telcos enjoyed a  period where they charged consumers exorbitantly. This was the main reason why Jio already had their stage set in 2016. Their offer of charge-free services to customers enabled them to immediately gobble up a section of the market share.

This was followed by the telecom war in India and competitive pricing which forced existing players like Airtel, Vodafone, and Idea to lower their prices and profit margins.

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How telcos are adapting to increased debt & 5G Preparation?

The telecom industry has forced its payers to adapt to raising funds from foreign investors in exchange for a stake in the company.

— Reliance Jio

After Reliance entered the telecom sector its debt shot up by 438%. Mukesh Ambani has set out to make Reliance a zero net debt company. This would mean wiping out 1.54 lakh crore of its debt. The following table shows the stakes sold and amount raised

— Airtel 

Airtel remains the only major player other than Jio which able to survive, compete, and raise capital with ease at this stage. It recently announced a 2.75% stake sale to raise 7500 crores ($1billion). In January, Airtel raised $15000 crores through qualified institutional placement and foreign currency convertible bonds for 7,500 crores ($1billion)

— Vodafone Idea

Vodafone and Idea have merged to form Vodafone Idea. This has enabled Vodafone Idea to become the top company in terms of subscribers. But this has only ensured their survival in the Indian markets.

Vodafone Group CEO Nick Read has vowed to not invest in the Indian markets. This can be justified due to the court ruling against the telcos with regard to AGR.  This has made investing in India a lost cause for Vodafone as all incomes earned by the companies ill be used to pay back the existing AGR dues apart from the new AGR dues that will keep on accruing.

What the Government can do?

To reduce the burden on the telecom industry the existing players have requested the Telecom Secretary to provide the 5G spectrum free of cost to existing players in an attempt to rescue the industry. The government can also ensure that cartels are not formed and players survive by benefiting the consumers.

This can be done by providing the 5G spectrum in exchange for the telcos agreeing to adhere to both floor pricing and price ceiling. By doing this the telecom industry will be provided some relief through 5G spectrum allocation as requested by telcos. The floor prices and price ceiling will ensure healthy competition and limit any adverse impacts on consumers.

NSHS 2020 Spring: A chance to have your say

Spring The National Student Housing Survey 2020 – Spring wave – is here! Starting today you have the opportunity to review your year with your student accommodation provider (if you’re reading this that’s likely us at The Student Housing Company), covering all aspects of student life and letting us know how we’ve been a part of it.

Spring

How it works

The survey is hosted by NSHS every Autumn and Spring to ensure higher education students have their feedback brought to accommodation providers and higher education institutions.

Your accommodation provider will likely be in touch to share details of the current survey by email, as well as on their social media and website. If you’ve found your way here first then you can go direct to the survey right here!

It only takes 10-15 minutes to complete the survey and it will ask you a range of questions depending on what student accommodation you live in. The questions can range from ‘how good is the internet?’ to ‘any ideas on how to enhance the sense of community in your accommodation?’. Your accommodation provider is looking to truly understand your experience, pulling on your first-hand knowledge on what helps you live the best student life.

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Why do the survey?

There’s loads of reasons, and we’ll be touching on those on our social media. But here’s the two big reasons:

Your opinion matters

We value what you feel, what you’ve experienced, and how you think we can help improve things for students across our residences for the years to come. An opportunity to genuinely shape the student accommodation of tomorrow (in fact, we’re offering another opportunity to do this in our latest competition, check it out).

Help us make changes that count

University is such a special experience, one that comes and goes so fast. Which is why we’re committed to delivering the ultimate student living experience whilst you’re with us. Through our wellbeing programme, incredible properties, and friendly service we want you to be, at the very least, happy in your student residence for university.

The best way for us to guarantee this is to be improving in the areas that need some more thought, as well as celebrating the bits that students have loved whilst living with us. Sometimes these aren’t obvious to us! So, to help us identify these areas we rely on things like the National Student Housing Survey for vital feedback. Feedback that comes direct from you, the students!

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The Rewards

If shaping the future of student accommodation, The Student Housing Company, and the experience of students that will follow in your footsteps isn’t enough then we reckon you’ll want to know about the prizes up for grabs!:

£500 for one lucky winner 

Weekend away to Paris anyone? ASOS shopping spree? Or put it away in that savings pot!

The weekly prize draw 

For students that Tweet or Share #NSHS20 saying that they have completed the survey, there’s an opportunity to win a variety of great prizes.

An event near you 

Most of our properties run competitions, give-away events and incentives for you to win once you complete the survey and tell us. Check with your reception today!