Derivatives

A derivative is a product whose value is derived from the value of an underlying asset, index or reference rate. The underlying asset can be equity, forex, commodity or any other asset. For example, if the settlement price of a derivative is based on the stock price of a stock for e.g. Infosys, which frequently changes on a daily basis, also have an impact on the derivative risks which also changes simultaneously on a daily basis. This means that derivative risks and positions must be monitored constantly.


OBJECTIVES OF THE STUDY



Ø      To study the functioning of derivatives market in India.

Ø      To study the concept of put and call options.

Ø      To understand the objectives of trading in options.

Ø      To study the pay-off on put and call options.

Ø      To present the trading procedure of options.

Ø      To suggest recommendations for people who invest in options.

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