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Derivatives

INDEX

CH 1: Introduction about derivatives
1.1 Derivatives in India
1.2 Development of derivative market in India
1.3 Types of traders in a derivative market
1.4 Risk characteristics of derivative
1.5 Factors contributing to growth of derivatives
CH 2: Types of derivatives
2.1 Future
2.2 Option
2.3 Futures vs. Forward
2.4 Swap
2.5 Swaption
2.6 Other types
CH 3: Structure of derivative market in India
CH 4: Benefits of derivatives
CH 5: Exchange traded derivatives on NSE
CH 6: Introduction about derivatives on BSE
CH 7: Derivatives in commodity
CH 8: Research methodology
CH 9: Objectives of study
CH 10: Business growth in derivative (NSE)
CH 11: Findings and suggestions
Bibliography

CHAPTER 1
INTRODUCTION ABOUT DERIVATIVES

The term “Derivative” indicates that it has no independent value. Its value is entirely derived form the value of the underlying asset. The underlying asset can be securities, Commodities, bullion, currency, Stock Index, live stock or anything else.
The term Derivative has been defined in Securities Contracts (Regulations) Act, as :-
“A Contract which derives its value form the price’s or index of prises, of underlying Securities.”

There are two distinct groups of Derivative:-
• Over-the-counter (OTC) derivatives are contracts that are traded (and privately negotiated) directly between two parties, without going through an exchange or other intermediary. Products such as swaps, forward rate agreements, and exotic options are almost always traded in this way. The OTC derivatives market is huge.
• Exchange-traded derivatives are those derivatives products that are traded via Derivatives exchanges. A derivatives exchange acts as an intermediary to all transactions, and takes Initial margin from both sides of the trade to act as a guarantee.

2.1 DERIVATIVES IN INDIA
Exchange traded financial derivatives were introduced in India in June 2000 at the two major stock exchanges, NSE and BSE. There are...