InvestorQ : What exactly is the equity derivative market in India and what does it consist of?
Rutuja Nigam made post

What exactly is the equity derivative market in India and what does it consist of?

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Riya Dwivedi answered.
1 year ago
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A market much bigger than equities is the equity derivatives market in India. Derivatives basically consist of 2 key products in India; Futures and Options. The difference between future and options is that while future is linear, options are not linear. Derivatives means that they do not have any value of their own but their value is derived from an underlying asset. For example, options and futures on Reliance Industries will be linked to the stock price of Reliance Industries and will derive their value from the same. Futures and options trading constitute an important part of the Indian equity markets. In India, the futures market picked up because it allows traders to take a leveraged approach to trading in stocks. Since it was largely like the erstwhile Badla system prevalent in the BSE, the stock futures have become a big hit in India. Post the rationalization of STT, the options markets have also taken off in a big way.

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