Take advantage of a rising stock market with derivatives

Derivatives primarily function as an effective hedge against cash investments. However, the stock market surge has sharpened interest in derivatives trading as a speculative tool, with lots of retail investors choosing to invest in futures and options. As derivatives trading begins to take off, there is a need to understand its underlying strengths and means to optimize futures and options investments. To shed light on what makes a successful derivatives investment strategy, Mangalam Maloo, Senior Research Analyst & Market Anchor, CNBC-TV18, hosted a special discussion with Siddharth Bhamre, Director - Alternative Investments and Research, InCred, and Chandan Taparia, Derivatives & Technical Analyst, Motilal Oswal, on Finq.com presents 'Learn the Advantages of Derivatives Over Direct Cash Flows', in collaboration with Moneycontrol.

Make A Fresh Start

As part of his opening remarks, Chandan Taparia explained what has got investors interested in the derivatives market, with market turnover hitting Rs. 14 lakh crores. He also touched upon the shifting balance from hedging to speculating. “It’s like T20, as opposed to a test match”, was how he chose to summarize the attraction of the derivatives market.

Touching upon the potential for speculation in the derivatives market, Mangalam Maloo inquired if the risks of such a strategy were being underplayed. In response, Siddharth Bhamre was quite clear. “Derivatives are complex is a myth”, he said, before adding that modern investors are fully capable of maintaining the kind of scrutiny and close monitoring that proper derivatives trading requires, with instant information available on their digital devices.