Wa0001.

Synopsis on FINANCIAL DERIVATIVES (FUTURES&OPTIONS)
Submitted to
Osmania University, Hyderabad-500007

In partial fulfilment of the requirements for the award of
the degree of
MASTER OF BUSINESS ADMINISTRATION

Submitted by.
Myakala Rahul: 1405-22-672-055
Under The Guidance of

Mrs. E. Sushma
Department of MBA
Badruka PG Centre, Kachiguda
(College Code: 1405) 2022-
2024
TITLE OF THE PROJECT
A Study on FINANCIAL DERIVATIVES (FUTURES & OPTIONS)

STATEMENT OF THE PROBLEM
The emergence of the market for derivatives products, most notably
forwards, futures and options, can be traced back to the willingness of risk-
averse
economic agents to guard themselves against uncertainties arising out of
fluctuations in asset prices. Derivatives are risk management instruments,
which derive their value from an underlying asset. Prices in an organized
derivatives market reflect the perception of market participants about the future
and lead the price of underlying to the perceived future level.
INTRODUCTION
The emergence of the market for derivatives products, most notably forwards,
futures and options, can be traced back to the willingness of risk-averse
fluctuations in asset prices. By their very nature, the financial markets are
marked by a very high degree of volatility. Through the use of derivative
products, it is possible to partially or fully transfer price risks by locking-in
asset prices. As instruments of risk management, these generally do not
influence the fluctuations in the underlying asset prices. However, by locking-in
asset prices, derivative product minimizes the impact of fluctuations in asset
prices on the profitability and cash flow situation of risk-averse investors.
Derivatives are risk management instruments, which derive their value from an
underlying asset. The underlying asset can be bullion, index, share, bonds,
currency, interest, etc.. Banks, Securities firms, companies and investors to
hedge risks, to gain access to cheaper money and to make profit, use
derivatives. Derivatives are likely to grow even at a faster rate in future.
DERIVATIVES:-
The emergence of the market for derivatives products, most notably forwards,
futures and options, can be traced back to the willingness of risk-averse
fluctuations in asset prices. By their very nature, the financial markets are
marked by a very high degree of volatility. Through the use of derivative
products, it is possible to partially or fully transfer price risks by locking-in
asset prices. As instruments of risk management, these generally do not
influence the fluctuations in the underlying asset prices. However, by locking-in
asset prices, derivative product minimizes the impact of fluctuations in asset
prices on the profitability and cash flow situation of risk-averse investors.
Derivatives are risk management instruments, which derive their value from an
underlying asset. The underlying asset can be bullion, index, share, bonds,
currency, interest, etc.. Banks, Securities firms, companies and investors to
hedge risks, to gain access to cheaper money and to make profit, use
derivatives. Derivatives are likely to grow even at a faster rate in future.
DEFINITION:
Derivative is a product whose value is derived from the value of an underlying
asset in a contractual manner. The underlying asset can be equity, forex,
commodity or any other asset.
TYPES OF DERIVATIVES:
The following are the various types of derivatives. They are:
FORWARDS: A forward contract is a customized contract between two entities,
where settlement takes place on a specific date in the future at today’s pre-
agreed price.
FUTURES: A futures contract is an agreement between two parties to buy or
sell an asset in a certain time at a certain price, they are standardized and traded
on exchange.
OPTIONS: Options are of two types-calls and puts. Calls give the buyer the
right but not the obligation to buy a given quantity of the underlying asset, at a
given price on or before a given future date. Puts give the buyer the right, but
not the obligation to sell a given quantity of the underlying asset at a given price
on or before a given date.
WARRANTS: Options generally have lives of up to one year; the majority of
options traded on options exchanges having a maximum maturity of nine
months. Longer-dated options are called warrants and are generally traded
overthe counter.
LEAPS: The acronym LEAPS means long-term Equity Anticipation securities.
These are options having a maturity of up to three years.
BASKETS: Basket options are options on portfolios of underlying assets. The
underlying asset is usually a moving average of a basket of assets. Equity index
options are a form of basket options.
REVIEW OF LITERATURE
Behaviour of Stock Market Volatility after Derivatives Golaka C Nath ,

Research Paper (NSE) Financial market liberalization since early 1990s has
brought about major changes in the financial markets in India. The creation and
empowerment of Securities and Exchange Board of India (SEBI) has helped in
providing higher level accountability in the market. New institutions like
National Stock Exchange of India (NSEIL), National Securities Clearing
Corporation (NSCCL), National Securities Depository (NSDL) have been the
change agents and helped cleaning the system and provided safety to investing
public at large. With modern technology in hand, these institutions did set
benchmarks and standards for others to follow.
AIMS AND OBJECTIVES
AIMS OF THE STUDY:
This study will help to understand Financial Derivatives (FUTURES &

OPTIONS)
OBJECTIVES OF THE STUDY:
• To analyse the operations of futures and options.

• To find the profit/loss position of futures buyer and seller and also the
option writer and option holder.
• To study about risk management with the help of derivatives.
RESEARCH METHODOLOGY
NATURE OF THE STUDY:
This study is based on analytical research and is descriptive in nature. Most

of the data is primary data which is collected through questionnaire. Even the
secondary data is collected from various websites and articles.
SCOPE OF THE STUDY:

The study is limited to “Derivatives” with special reference to futures and
option in the Indian context and the Interconnected Stock Exchange has been
taken as a representative sample for the study. The study can’t be said as totally
perfect. Any alteration may come. The study has only made a humble attempt at
evaluation derivatives market only in India context.
CONCLUSION
Options trading can prove to be a great opportunity for investors and traders
once the basic concepts are understood. However, it can also have a negative
impact if invested without proper research.
DATA COLLECTION METHODS
Primary data
For obtaining the primary data I am preparing the questionnaire.
(i)Number of questions: 14
(ii)Sampling technique: Convenience sampling

(iii)Sampling unit: It comprises of employees of MNC’s, government
employees, self-employed/business, unemployed customers, students.
(iv)Sample size: The sample size is restricted to 100, which comprises people
from different regions of Hyderabad.
(v)Sampling area: The area of research includes different regions of Hyderabad.
Secondary data
Secondary data is collected through various websites and various article
sources.
TOOLS FOR ANALYSIS
• Percentages
• Charts and graphs

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Synopsis on FINANCIAL DERIVATIVES (FUTURES&OPTIONS)

Osmania University, Hyderabad-500007

MASTER OF BUSINESS ADMINISTRATION

Myakala Rahul: 1405-22-672-055

Under The Guidance of

A Study on FINANCIAL DERIVATIVES (FUTURES & OPTIONS)

Behaviour of Stock Market Volatility after Derivatives Golaka C Nath ,

AIMS AND OBJECTIVES

AIMS OF THE STUDY:

This study will help to understand Financial Derivatives (FUTURES &

• To analyse the operations of futures and options.

NATURE OF THE STUDY:

This study is based on analytical research and is descriptive in nature. Most

SCOPE OF THE STUDY:

(ii)Sampling technique: Convenience sampling

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