1
CONTENTS
CHAPTER 1: INTRODUCTION…………………………….. ................................................................ 4
1.1 DEFINITION OF DERIVATIVES .....................................................................................................4
1.2 ORIGIN OF DERIVATIVES............................................................................................................4
1.3 DERIVATIVES IN INDIA ..............................................................................................................5
1.4
TWO IMPORTANT TERMS.............................................................................................................6
1.4.1
Spot Market ........................................................................................................................................................6
1.4.2
Index ......................................................................................................................................................................7
CHAPTER 2: DEFINITIONS OF BASIC DERIVATIVES ...............................................................8
2.1
FORWARDS...............................................................................................................................8
2.1.1
Settlement of forward contracts ............................................................................................................9
2.1.2
Default risk in forward contracts .........................................................................................................10
2.2
FUTURES................................................................................................................................11
2.3 OPTIONS................................................................................................................................12
2.3.1
Call option ................................ ................................ ................................ ................................ ....................