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Derivatives

Derivatives are essentially a collection of a broad class of financial instruments that derive their value from other financial instruments (‘the underlying’), conditions or events. Thus, in a derivative contract between two parties the value of the contract is linked to the price of another financial instrument, condition or event.

Broad Classification of Derivatives can be done based on:

Relationship between underlying and derivative, such as futures and options
Type of underlying, such as equity derivatives, forex derivatives, commodity derivatives, etc.
Market in which they are traded, such as ETF or OTC

Benefits of Derivatives:

Provide leverage or gearing
Speculate and make profit
Mitigate risk in the underlying
Obtain exposure to underlying in case it is not possible to trade in the underlying
Create options where the value of the derivative is linked to a specific condition or event


STRATEGIES

The commonly used derivative strategies are:
Hedging
        Aims to reduce risk in existing positions in the current portfolio
Speculation
       Aims to take advantage if the value of the underlying asset moves as per expectations (e.g. moves in a given direction, stays in or out of a specified range, reaches a certain level)
Arbitrage
       Aims to provide arbitrage opportunities in cases where the movements are not as per expectations, for example when the current buying price of an asset falls below the price specified in a futures contract to sell the asset

We at Paterson employ all these, depending upon the circumstances.

PATERSON: DERIVATIVES STRATEGIES

Our speculative strategies are based on the key information from Market players, where in we have an idea about the market swing on the either side in a particular month.

SEBI Regn – (CASH) INB231367195, (derivatives) INF231367195, (currency) INE231367195 || BSE: Member ID – 3083 | SEBI Regn – (cash) INB011367134, (derivatives) INF011367134, (WDM) Clearing no.: 3083 || MSE: SEBI Regn – (cash) INB041251431 || MCX-SX: Member ID – 32700 | SEBI Regn – (currency) INE261367192 || CDSL DP: SEBI Regn – IN-DP-CDSL-312-2005 || PMS: SEBI Regn – PM/INP 000003856 || MF: AMFI Regn – ARN 3077 || MCX: Member ID - 31420 | FMC Unique Member Code - MCX/TCM/CORP/1175.

For grievances, mail us at : customer.grievance@paterson.co.in