Do you want to make money in the stock market even if you don't own any shares?

Do you want to make money in the stock market even if you don't own any shares? You can do it through short selling. The technique involves selling shares you don't own at a higher price and then buying them back at a lower price. The difference between the two prices is your profit. However, this involves risk as the short seller does not own the shares during trading and it is probable that he may default on settlement or delivery. To reduce the risk, SEBI launched the Securities Lending and Borrowing Scheme (SLBS) on the NSE in April 2008.

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When a trader short sells shares he doesn't own, it's termed a naked short sale. SLBS allows the trader to borrow shares at the initiation of the short sale. This is called covered short selling and ensures that the trader fulfils his obligation by imposing adequate margins. Under the scheme, the lenders give their idle shares to short sellers for a period ranging from one month to a year, for a fee that is determined by demand and supply. This gives long-term investors an opportunity to earn additional income. SLBS is applicable in the cash market.
However, short-selling can also be done in the derivatives market. An investor can go short on a stock or market index by selling a futures contract or by buying a put option. Futures enable a trader to buy or sell a fixed quantity of stocks or index (defined in terms of market lots) within a specified period, while a put option grants its buyer a right to sell. So if XYZ stock is trading at Rs 100, the futures seller as well as the buyer of a 100 strike put option will gain if the price falls below Rs 100 on the date of settlement.
However, short selling via the derivatives market has some drawbacks compared with doing it through SLBS in the cash market. In the derivatives market, the futures and options (F&O) are traded in market lots, so one has to buy or sell the number of contracts specified in the rulebook. On the other hand, in SLBS, the market lot is one stock. So if a trader wants to sell ITC futures, he needs to trade in a market lot of 1,000 shares. This means a wrong judgment could magnify the losses for the trader. However, by using SLBS, he can choose to short sell only one stock. This safeguards him from the ill-effects of leverage.
Pros and Cons
SLBS helps in exploiting arbitrage opportunities between the cash and derivatives markets. When the futures are trading at a discount to the cash market, one can short sell the shares by borrowing them through SLBS while simultaneously buying the futures contract. Let's assume the stock of ABC is trading at Rs 200 in the cash market and at Rs 180 in the futures market. The market lot is 100 shares, while the market-determined cost of borrowing the shares through SLBS is Rs 5 per share. If we borrow shares in the cash market and sell them, and simultaneously buy the futures contract, it will entail a profit of Rs 2,000 [100 x (200-180)]. Even after paying Rs 500 as borrowing cost, we will generate Rs 1,500 as riskless profit.
Though SLBS seems beneficial, investors have ignored it and all efforts to garner their interest have failed. Between June 2009 and June 2010, there have only been 106 trades, amounting to a meagre Rs 6.42 lakh. The majority of the participants prefer the derivatives segment for short selling. According to experts, the reason for the lack of interest is the high cost associated with SLBS. According to Santanu Syam, Executive Director of Operations at Angel Broking: "A borrower needs to pay the full amount up front, besides additional margins. The sum of all margins works out to as high as 100 per cent or sometimes even more." Also, SLBS is applicable only to stocks that are traded in the F&O segment.
The system forces investors to shell out more than they need to pay in the derivatives segment. For example, if an investor wants to borrow 125 shares of Infosys at a price of Rs 2,600, it would involve a payment of Rs 3.25 lakh, plus the cost of borrowing. Also, margins such as cash margins are as high as 25 per cent of the lending price. So a short seller will need to pay Rs 4.06 lakh. In the derivatives segment, the investor will pay about 40 per cent margin (all inclusive).
Therefore, the same could be short sold with a margin of Rs 1.3 lakh. Short selling is beneficial when the markets are overvalued or when stocks are trading at unwarranted premiums over their fair values. Also, it enhances liquidity and provides stability to the stock markets. "To make the scheme more useful, the regulator should revise the margin requirement and introduce scrips other than those listed in the F&O segment," says Syam. Hopefully, the recent approval by SEBI to allow physical settlement in the derivatives segment will be the impetus that revives SLBS.

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6 Smart Tips To Avoid the Stress of Shopping For Holiday Gifts

For those who find making their gifts list for the holidays a very exciting activity, good for you. Those who find it less than an appealing bustle don't fret. Many share your sentiment. The problem with making a list is that it seems to become never ending especially when you decide on checking it twice. Okay, you're no good ol' Saint Nick but hey, this is only looking at it with a bird's eye view. What you don't know is that buying the gifts could actually cause a bigger headache than the preparing of the list.

Who wants to wallow in the stress brought by holiday gift-giving? Holidays need not always put you in a major state of panic. Here's how to breeze through the holiday season with these tips on buying gifts.

1. Say no to a rigid gift list.

This doesn't mean that when you arrive on a situation like when you get to see a "spunkier" Ipod when you originally thought of giving out a Walkman, you'll always give in. The thing is that you should be open to alternatives with your choice of gifts. You might as wel, jot down all the possible options on that gift on your list in case you're having a hard time looking for it.

2. Nifty over Hefty.

An expensive price tag does not necessarily mean a perfect gift. What is more appreciated is creativity and when someone puts in genuine effort. Your budget does not have to suffer so much during the holidays. Doing your homework will get you a long, long way.

3. Doing some favor is a labor of love.

Instead of material presents, an act of kindness can very well serve as a very valuable holiday gift. One may run errands or do things like babysit for a busy aunt, cook dinner for a couple, or do a car wash. Of course, just don't forget to do this for free. One more thing, you can also do this goodie-two-shoes stuff not only for your family and friends but also for those less-fortunate.

4. Techie not Newbie.

For those who are still thinking that the Internet is only a mirage of the future, please wake up. You're so late! Online shopping is one of the many conveniences the Internet offers. Just click the mouse and voila! Before you are a wide array of brands and pricelists for your choice of gifts. Amazon.com, EBay, and Overstock.com are just a few of the best web sites that can help you in this endeavor. Just remember to provide ample time for delivery.

5. Comfort Zone.

During the commotion from shopping for holiday gifts, it's wise to wear your most comfortable outfits. This will make it easier for you to rummage through shelves of stuffs and will make scurrying not much of a hassle.

6. Early Bird Gets the Most Appreciation

Yes, there's still no better way of dealing with this gift-buying problem but to do it ahead of time. Creating your list about two months before the "season to be jolly" will help a lot in downsizing the hassles of this activity. Some can even go the length of preparing for it at least three months before the holidays.

Some people never have to worry about buying for gifts. Can you imagine having a closet of stuff always ready to be given out for various occasions? Yes, these cases exist. But you don't have to really succumb to such almost-paranoid acts. Following the simple but noble tips above will do. Click here to read More

Getting Out Of Debt - The In's and Out's

Getting out of debt can seem like a challenge—but it’s more than possible—it’s easy. It may seem like an uphill struggle a lot of the time, but rest assured, you can get out of debt much faster and a lot more easily than you’d like to think. Read on to learn more.

To many people, getting out of debt ranks right up there with finding the yellow brick road out of oz—something that is fun to fantasize about but something that is not based in reality. The truth is that getting out of debt is achievable but you have to make a commitment to getting out of debt and you have to be serious about your intentions and your choices as you progress along the path.
Unless you are a lottery winner, you need to also be reasonable and acknowledge that it is impossible to get out of debt overnight, but with the right strategy, it can happen within a few years which is acceptable given it probably took you a few years to get into debt also. Many times people give up on getting out of debt because they lose enthusiasm when they realize that their efforts hardly seem to be making a dent in their owed amounts of money…but don’t let it get you down.
There are two vital things that you must do if you want to get out of debt successfully—the first is figure out why you are in debt. If you do not stop to look at your bad spending habits you likely will fall into debt again even if you are successful at getting out of debt. This is possibly the worst result that can happen, outside of getting into deeper debt which is why you must nail bad habits down and avoid them at all costs before getting trying to rid yourself of debt—otherwise you’ll just fall right back in.
The second step you must take is to seek the aid of a consultant who is professionally trained to offer debt assistance. Many community centers and non-profit organizations can set up a meeting or consultation for free, so take advantage of these opportunities. The people you speak to are trained to handle tough debt situations, and when they advise you it is truly for your own good and not their own financial gain.

Ready to get out of debt? Learn a whole lot more just by visiting.Get out of debt and start living a more stable and happy life