The Indian stock market saw moderate gains today, February 25, 2025, as key sectors such as financials and automobiles rebounded from previous losses. However, metals and IT stocks continued to struggle amid global economic concerns. Investors remained cautious due to uncertainties in international markets, fluctuating commodity prices, and foreign fund outflows. Market Performance Overview Nifty…
1. What Are Exchange-Traded Derivatives (ETDs)? Exchange-Traded Derivatives (ETDs) are standardized financial contracts that are bought and sold on a regulated exchange like the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), or Chicago Mercantile Exchange (CME). These derivatives are used for hedging risk or speculating on price movements of stocks, commodities, currencies, or interest…
1. What Are OTC Derivatives? Over-the-Counter (OTC) derivatives are customized financial contracts that are traded directly between two parties, rather than on an exchange. These contracts allow businesses and financial institutions to tailor the terms to meet their specific risk management needs. Unlike Exchange-Traded Derivatives (ETDs), which are standardized and traded on regulated exchanges, OTC…
Introduction: Why Currency Risk Matters In today’s interconnected global economy, Indian companies that engage in international trade often face a hidden challenge: currency risk. This risk arises when companies receive payments or make payments in foreign currencies. Fluctuations in exchange rates can lead to unexpected losses or reduced profits. So, how can Indian businesses protect…
Derivatives are generally classified into contingent claims and forward commitments: Contingent Claims: These are derivatives whose payoffs are dependent on the occurrence of a specific event. Examples include options and credit default swaps (CDS). Call Option Contract (B): This is a contingent claim because its payoff depends on whether the underlying asset’s price exceeds the…