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C. Raja Rajeshwari

In the article dated 28/12/2003, you have said that on being assigned, one has to settle the difference in cash, as all contracts are cash settled on NSE. In cases where covered calls are written against the holding of shares, can the settlement be effected by delivery of shares? If not, what is the market mechanism for selling the shares and settling in cash? — S. Padmanabhan

You can settle options only by cash. Even if you have written covered calls against shares that you already hold, you have to pay in cash only, as physical settlement has not been introduced in India as yet.

So you have to sell the shares you already hold in the cash market and at the same time, square off the position in the call by taking a long position. You have to pay upfront for the long call position. You would receive the sales proceeds from the underlying stock only on T+2 (two days after the trading day).

Kindly suggest a correspondence course to understand derivatives in detail. Also, suggest some books to get in-depth knowledge. — G. Sankaranarayanan, Narayanan, Padma, A.V Francais, Harish Seema, Hari Narang and Mahipal

The National Stock Exchange's Certification in Financial Markets offers a derivatives module. The course material is comprehensive and would provide you with a fairly comprehensive knowledge of futures and options. In addition, the exam would provide you with a certificate. For more details, refer Web site www.nseindia.com.

BSE Training Institute offers three full-time courses on derivatives. They are: basic programme on derivatives; advanced programme on index & stock futures and workshop on options. For more details refer Web site (www.bseindia.com/training/about.asp) or contact BSE Training Institute, Mumbai

You can refer the following books:

# Futures markets - Theory and Practice by Sunil K Parameswaran.

# Understanding Options by Robert W. Kolb.

# Options, Futures and Other Derivatives by John C. Hull

These books will help you understand the concepts on futures and options. The NSE Web site (www.nseindia.com) also has an F&O Investor Centre, where you can get basic reading material. You can also refer to our Web site www.blonnet.com or www.thehindubusinessline.com for information on derivatives.

If you have any queries relating to the futures/options please mail them to Futures & Options, Kasturi & sons, 859-860, Anna Salai, Chennai 600 002 or email them to fno@thehindu.co.in with a mention of futures/options in the subject line of the mail.

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