A Study On Financial Derivatives And Its Relevance With Special Reference To Swaps & Options

Abstract

The development in financial derivatives markets is essential for the expansion of the economy. Risk management is an integral part of the derivatives market. Derivative markets can be used to extract value from underlying assets. Participants in the derivative markets include the speculators, the hedgers, and the arbitragers, to name just a few. Predicting the outcome of an event is a way to generate money. Derivatives finance instruments are the most commonly used. Derivatives are used extensively in hedging. There is a huge demand for derivatives in India, and hedging through futures or options markets reduces overall market risk. For derivatives, there are both regulated and unregulated exchanges (OTC). Forwards, futures, options, and swaps are the most frequent types of derivative contracts. Risk and reward can be increased by using leveraged financial products such as derivatives. Derivatives markets have been more important in recent years because of their critical role in economic growth.