Table of Content
Preface
Introduction
The Derivatives Market in India
Interest Rates
Forward Contracts
Futures Contracts
Hedging Strategies Using Futures
Single Stock Futures and Stock Index Futures
Interest Rate Futures
Currency Futures
Swaps
Fundamentals of Options
Call and Put Options
Combinations of Options: Trading Strategies
Put–Call Parity
The Binomial Options Pricing Model
The Black–Scholes Options Pricing Model
Currency Options, Interest Rate Options and Options on Futures
Greeks in Options
Exotic Options
Credit Derivatives

The widespread use of derivative instruments—considered to be one of the main causes of the 2008 financial crisis—has not flagged since the global economic meltdown. Contrary to popular belief, the improper use of derivatives, not the nature of derivative securities themselves, caused the collapse of 2008. In India, derivatives were introduced as late as 2000. Today, the National Stock Exchange is the number one trading spot in the world for index futures. The volume of trade of both financial and commodity-related derivatives has increased significantly over the past few years. During this period, the market has witnessed the introduction of several new products designed specifically for India, making it necessary for finance professionals to understand the working of these products in addition to the existing derivatives—a need that this book fulfills.

Derivatives and Risk Management provides readers with a thorough knowledge of the functions of derivatives and the many risks associated with their use. Besides discussing the particular derivative instruments available in India, the book concentrates on four types of derivatives—forward contracts, futures contracts, swap contracts and options contracts. It is targeted at postgraduate students of commerce, finance and management, and blends theory, problems and cases to introduce the basic concepts in a lucid, engaging manner. It will also be of use to fund managers, risk-management specialists, treasury managers, students taking the CFA examinations and anyone who wants to understand the derivatives market in India. Salient Features
Explains concepts through detailed examples and problems
Includes three unique chapters: “Derivatives in India”, “Stock Futures and Stock Index Futures”, and “Exotic Options”
Uses learning tools such as learning objectives, figures, tables, chapter summaries and end-of-chapter questions, problems and cases
Presents snapshots of real-world situations through chapter-opening boxes
Includes a detailed glossary and bibliography