In a futures market delivery is due at a later date unlike spot market where financial instruments or commodities are traded for immediate delivery. A derivative is a financial security with a value that is reliant upon, or derived from, an underlying asset or group of assets. Derivatives traded on exchanges are standardized and more heavily regulated. OTC derivatives generally have greater counter party risk than standardized derivatives.In future both buyer and Seller has obligation to honor the contract. In options buyer has the rights but no obligation to buy in call option or sell in put option. Seller does not have any rights but the obligation to honor the contract if buyer exercises his rights.Futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price. Traders uses options and futures for the reasons like hedging their portfolio , less capital requirement , high leverage, realization of money in a day to day basis . The index values of NIFTY and SENSEX can be bought and sold in future and options as trade. A cash settlement is a settlement method used in certain futures and options contracts where, upon expiration or exercise, the seller of the financial instrument does not deliver the actual (physical) underlying asset but instead transfers the associated cash position.