The derivatives market is similar to any other financial market and has following three broad categories of participants:
HEDGERS:These
are investors with a present or anticipated exposure to the underlying asset
which is subject to price risks. Hedgers use the derivatives markets primarily
for price risk management of assets and portfolios.
SPECULATORS:These
are individuals who take a view on the future direction of the markets. They
take a view whether prices would rise or fall in future and accordingly buy or
sell futures and options to try and make a profit from the future price
movements of the underlying asset.
ARBITRAGEURS: They take positions in financial markets to earn riskless profits. The arbitrageurs take short and long positions in the same or different contracts at the same time to create a position which can generate a riskless profit.
ARBITRAGEURS: They take positions in financial markets to earn riskless profits. The arbitrageurs take short and long positions in the same or different contracts at the same time to create a position which can generate a riskless profit.
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