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An Analytical Study on Derivatives Trading in India with specific emphasis on Equity Derivative Trading of NSE

  • Unique Paper ID: 172732
  • Volume: 11
  • Issue: 9
  • PageNo: 705-709
  • Abstract:
  • Derivatives are popular Financial Instruments whose value is derived from an underlying asset or a group of assets. The underlying asset may be Stock, Bond, Commodity, Currency, Crude Oil or Interest Rate or Market Indices. This market is a financial market where derivative contracts are executed. Derivatives are of four types namely, Forwards Futures, Options and Swaps. These are considered to be contracts to manage risk and used to enhance portfolio returns. The National Stock Exchange is considered as the pioneer in this area and it commenced trading in derivatives in the year 2000. The current study focuses on the trading process of Derivatives listed in Nifty Index Futures and Options contracts. A comprehensive analysis is done to understand the quantum of volume traded and the study also focuses on how the trading volume affects the fluctuations in the market. The study has revealed that the day trades are about 37% and 48% of total trades for futures and options contracts. Therefore, it is concluded that there are high fluctuations in these two categories of contracts. It is observed in the process of analysis that the volume traded by individuals is much higher in categories such as Intra-Day and Non-Trade Trades. The study has considered variance as the unbiased tool to measure the fluctuations. Logit Regression function is used to measure the effect of volume on trade size and inventory on volatility. It is envisaged during the course of the research work that option contracts are weaker in volume estimates than the future contracts. This work is an analysis of volume and volatility estimates for future and option contracts on NIFTY Index.
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Cite This Article

  • ISSN: 2349-6002
  • Volume: 11
  • Issue: 9
  • PageNo: 705-709

An Analytical Study on Derivatives Trading in India with specific emphasis on Equity Derivative Trading of NSE

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