Derivatives are financial instruments whose value is derived from the underlying assets, such as commodities, stocks, bonds, currencies, or interest rates. Common types of derivatives include futures, options, swaps, and forwards. Futures contracts are available on Equities, Indices, Currency and Commodities. Derivatives can be traded over-the-counter (OTC) or through a regulated exchange.
Derivative contracts generally represent agreements between parties either to make or receive payments or to buy or sell an underlying asset on a certain date (or dates) in the future. Parties generally use derivative contracts to mitigate risk, although such transactions may serve other purposes.
Derivative documentation refers to the legal and contractual agreements that govern the trading and use of derivatives. Most of the derivatives in the global derivatives market are documented under the International Swaps and Derivatives Association (ISDA) documentation.
You need a Demat account and an online trading account to trade in derivatives and enough of the amount in your trading account. The amount you need depends on the margin amount required for the contract.
