Derivatives – Futures and Options

The stock exchange facilitates trading of securities or derivatives. The main role of the exchange is to maintain transparency and fairness in dealing with trades and also ensuring adequate knowledge dissemination about the prices of shares.The idea behind the introduction of derivatives in the market is to hedge the risk or volatility in the prices of the underlying. Traders need such instruments to cover their risk in the spot market which is affected by fluctuation in prices of securities, commodities,etc.