Since the time derivatives were introduced in the year 2000, their popularity has grown manifold.

Derivatives are financial contracts that derive their value from an underlying asset.

The buyer and seller of this contract have opposite projection of the future trading price.

Both are betting on the future value of the underlying asset to book profits.There are four types of derivative contracts – forwards, futures, options and swaps.

In the Indian markets, futures and options are standardized contracts, which can be freely traded on exchanges.

They have several advantages of trading in derivatives.

You can earn money on shares that are lying idle,Protect your securities against fluctuations in prices through hedging And transfer market risk to those with an appetite for higher risk.

Trading derivatives offer high profit potential but also carries major exposure to risk, because of leveraged bets  that’s why you should carry thorough study or take help of professional advisors before starting to trade.

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