7/24/2019 Equity Research Lab 20 Febrary Nifty Report

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7/24/2019 Equity Research Lab 20 Febrary Nifty Report

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I!TRO"UCTIO! TO EQUITY "ERI#ATI#ES

  The emergence of the market for equity derivative products,most notably forwards, futures and options, can be traced backto the wish of risk-averse economic agents to guard themselvesagainst uncertainties arising out of fluctuations in asset prices.

By their very nature, the economic markets are marked by a very high degree of volatility. Through the use of derivativeproducts, it is possible to partly or fully transfer price risks bylocking-in asset prices. As instruments of the risk management,these generally don't influence the fluctuations in the

underlying as set prices. yet, by locking in asset prices,derivative products minimie the impact of fluctuations in assetprices on the benefit and cash flow situation of risk-averseinvestors.

7/24/2019 Equity Research Lab 20 Febrary Nifty Report

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"ERI#ATI#ES "E$I!E"

  "eri%ati%e is the &r'(uct )h'se %a*ue is (eri%e( +r', the %a*ue'+ '-e 'r ,'re asic %aria*es are ca**e( ases i- a &r'&era&&eara-ce. The u-(er*yi- asset ca- e equity +'re0 c',,'(ity'r a-y 'ther asset. $'r the e0a,&*e )heat +ar,ers ,ay )ish t'se** their har%est at the +uture (ate t' e*i,i-ate the ris1 '+ a cha-e

i- &rices y that (ate. Such a tra-sacti'- is a- e0a,&*e '+ the(eri%ati%e. The &rice '+ this (eri%ati%e is (ri%e- y the s&'t &rice '+the )heat )hich is the2u-(er*yi-2. I- the I-(ia- c'-te0t theSecurities C'-tracts Act 3456 7SCRA8 (e+i-es the 2(eri%ati%e2 t'i-c*u(e the +'**')i- 93. A security (eri%e( +r', the (et i-stru,e-t shares the *'a-

 )hether it is secure( 'r u-secure( the ris1 i-stru,e-t 'r c'-tract+'r (i++ere-ces 'r a-y 'ther +'r, '+ security.. A c'-tract )hich (eri%es its %a*ue +r', the &rices 'r the i-(e0 '+&rices '+ u-(er*yi- securities.

7/24/2019 Equity Research Lab 20 Febrary Nifty Report

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I+ y'u )a-t t' ,'re i-+'r,ati'- rear(i- thest'c1 ti&s !i+ty ti&s C',,'(ity ti&s

Equity ti&s  ca** ; <3=4444>> 'r +i** +'r,

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