Siddarth Bhamre, head of equity derivatives, Angel Broking, says on CNBC-TV18's The Derivatives Show, an investor's ability to bear risk is key to participation in the derivatives market.
A derivative is an instrument whose value is derived from the value of one or more basic variables called bases (underlying asset, index, or reference rate) in a contractual manner.
Most exporters price their goods on a 'cost plus' basis. They add a certain cushion for forex volatility to their domestic costs and quote a Dollar price accordingly.