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Rahul Presentation

This document provides an overview of a study on financial derivatives, specifically futures and options. It discusses how derivatives emerged from the need to hedge against price fluctuations in underlying assets. The study aims to analyze futures and options operations and how they are used for risk management. It will use questionnaires and secondary sources to collect data, and describe the profit/loss positions of various derivatives traders. The conclusion is that options trading provides opportunities but also risks that require proper understanding.

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34 views11 pages

Rahul Presentation

This document provides an overview of a study on financial derivatives, specifically futures and options. It discusses how derivatives emerged from the need to hedge against price fluctuations in underlying assets. The study aims to analyze futures and options operations and how they are used for risk management. It will use questionnaires and secondary sources to collect data, and describe the profit/loss positions of various derivatives traders. The conclusion is that options trading provides opportunities but also risks that require proper understanding.

Uploaded by

ragnarlothbrok3901
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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A Study on FINANCIAL DERIVATIVES

(FUTURES & OPTIONS)


TITLE OF THE PROJECT:
 A Study on FINANCIAL DERIVATIVES (FUTURES & OPTIONS)
STATEMENT OF THE PROBLEM:
 The emergence of the market for derivatives products, most notably
forwards, futures and options, can be traced back to the willingness of risk-
averse economic agents to guard themselves against uncertainties arising out
of fluctuations in asset prices.
 Derivatives are risk management instruments, which derive their value from
an underlying asset. Prices in an organized derivatives market reflect the
perception of market participants about the future and lead the price of
underlying to the perceived future level.
INTRODUCTION
 The emergence of the market for derivatives products, most notably forwards,
futures and options, can be traced back to the willingness of risk-averse
economic agents to guard themselves against uncertainties arising out of
fluctuations in asset prices.
 Derivatives are risk management instruments, which derive their value from
an underlying asset. The underlying asset can be bullion, index, share, bonds,
currency, interest, etc.. Banks, Securities firms, companies and investors to
hedge risks, to gain access to cheaper money and to make profit, use
derivatives. Derivatives are likely to grow even at a faster rate in future.
DERIVATIVES
 The emergence of the market for derivatives products, most notably forwards,
futures and options, can be traced back to the willingness of risk-averse
economic agents to guard themselves against uncertainties arising out of
fluctuations in asset prices. By their very nature, the financial markets are
marked by a very high degree of volatility. Through the use of derivative
products, it is possible to partially or fully transfer price risks by locking-in
asset prices.
DEFINITION
 Derivative is a product whose value is derived from the value of an underlying
asset in a contractual manner. The underlying asset can be equity, forex,
commodity or any other asset.
 TYPES OF DERIVATIVES:

 The following are the various types of derivatives. They are:


 FORWARDS: : A forward contract is a customized contract between two
entities, where settlement takes place on a specific date in the future at
today’s pre-agreed price.
 FUTURES: A futures contract is an agreement between two parties to buy or
sell an asset in a certain time at a certain price, they are standardized and
traded on exchange.
 OPTIONS: Options are of two types-calls and puts. Calls give the buyer the
right but not the obligation to buy a given quantity of the underlying asset,
at a given price on or before a given future date.
 WARRANTS: Options generally have lives of up to one year; the majority of
options traded on options exchanges having a maximum maturity of nine
months.
REVIEW OF LITERATURE
 Behaviour of Stock Market Volatility after Derivatives Golaka C Nath ,
Research Paper (NSE) Financial market liberalization since early 1990s has
brought about major changes in the financial markets in India.
 The creation and empowerment of Securities and Exchange Board of India
(SEBI) has helped in providing higher level accountability in the market.
 New institutions like National Stock Exchange of India (NSEIL), National
Securities Clearing Corporation (NSCCL), National Securities Depository
(NSDL) have been the change agents and helped cleaning the system and
provided safety to investing public at large.
 With modern technology in hand, these institutions did set benchmarks and
standards for others to follow.
AIMS AND OBJECTIVES
AIMS OF THE STUDY:
 This study will help to understand Financial Derivatives (FUTURES &
OPTIONS)

OBJECTIVES OF THE STUDY:


 To analyze the operations of futures and options.
 To find the profit/loss position of futures buyer and seller and also the
option writer and option holder.
 To study about risk management with the help of derivatives.
RESEARCH METHODOLOGY
NATURE OF THE STUDY:
This study is based on analytical research and is descriptive in nature. Most of the
data is primary data which is collected through questionnaire. Even the
secondary data is collected from various websites and articles.
SCOPE OF THE STUDY:
The study is limited to “Derivatives” with special reference to futures and option
in the Indian context and the Interconnected Stock Exchange has been taken as a
representative sample for the study. The study can’t be said as totally perfect.
Any alteration may come. The study has only made a humble attempt at
evaluation derivatives market only in India context.
DATA COLLECTION METHODS
Data collection method :
Survey Method & Public Record
Sample size: 50
Sampling method: Instrument Convenience Sampling & Stratified Random
Sampling
Data collection: Questionnaire
CONCLUSION
 Options trading can prove to be a great opportunity for investors and
traders once the basic concepts are understood.
 However, it can also have a negative impact if invested without proper
research.
THANK YOU!

M.Rahul
1405-22-672-055

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