This is a presentation to highlight an instance in my academic life when my decision to take a big risk resulted in a positive outcome

1. AN INSTANCE WHEN I TOOK A GREAT
RISK, AND THE OUTCOME
BY
SUDHEENDRA MOHAN PUTHUSSERY

2. BACKGROUND
 During my final year MBA, as part of the course requirement, we had to
undertake a 6 month Project on which we would prepare a thesis and
dissertation.
 Being from finance background, I had chosen a project in financial risk
management and derivatives. This, I felt would help improve my
understanding of the topics discussed in class.
 I decided to undertake my project on the topic of option pricing. My
research guide advised me that since most of the areas that the project
touches were quite advanced and not covered in the curriculum, a basic
empirical analysis would suffice. He said that in- depth analysis using real
data would be very rigorous and a tough ordeal in the given time limit.
 But since the project would be a reflection of my 2 years of graduate
studies, I felt that just an empirical analysis would not do justice. I had to
do an in depth study using real data.

3. WHAT WERE THE RISKS INVOLVED?
 Since the project was about advance topics not covered by the
curriculum, I would have to learn many new complex concepts on my
own in a very short time. Until then, my guide would not be able to
help me
 To arrive at sort of any reliable conclusion, I would have to do
rigorous numerical analysis across many months on data which is
very difficult to obtain
 All this had to be done within the daily 2-3 hours allotted for project
work (outside routine academic time)
 Having given my revised project scope, if I failed to finish my project
as per the revised scope in the time limit, I would not be given my
Graduate degree certificate.

4. ACTION PLAN
 I took the first 5-6 weeks to familiarize myself with the new topics.
Every evening, I would then discuss the same with my guide to cement
my understanding
 I went to many databases ( RBI, NSE) and collected mass data. On
filtering, I found out that the USD-INR options had trade volume enough
to justify a numerical study.
 Based on the methodology adopted by some of my predecessors, I
started on building the project framework and performing advanced
analysis. In order to better perform numerical analysis, I sought the
help of soft wares like R studio, VBA etc.
 Initial aim was to compare the traditional Black Scholes model and the
Garman Kohl Hagen model against market price to determine the
effectiveness of each model
 The results shown by analysis confirmed my initial hunch- necessity of
an in depth real data analysis rather than just an empirical analysis.

5. PROJECT RESULT
 Successfully developed analytical data on the pricing effectiveness of
Industry’s 2 most accepted option pricing models for 2 years. It was
found that neither of them was very effective in reflecting market
sentiments and price pattern and often mispriced the INR-USD
options. This was by itself an important conclusion
 I therefore developed a modified option pricing formula to account for
the volatility factor ( mostly ignored by the other 2 formulae). This
model was found to be more accurate and more consistent than the
other two
 My Guide was very impressed with the results. He commented that he
didn't’t expect such good results in such short time. He nominated my
paper to an International conference. In 2013, I made a presentation
on the same paper at an International Conference organized by VIT.
 I also received highest possible grade for project work awarded that
year

6. LEARNING
 In life, the real joy is derived when you learn to challenge the status
quo and do something new - by going out of your comfort zone and
achieving something against the odds.
 With great risk comes great result
 Always be open to learn new things- The more you learn, the more you
dare.

7. CERTIFICATE FOR PAPER PRESENTATION

8. THANK YOU