HANDBOOK of DERIVATIVES

The world is undergoing a constant change and is exposing the firms as well as investors to a high level of risk. Derivatives are considered as a risk management tool, firms and investors have faced difficulties with derivatives since the managers or investors have a little knowledge of how to use derivatives rather than understanding the pricing of derivatives. Existing textbooks aim to train students to become traders rather than users of derivatives. To be a user of derivative it is important to understand how value is being created by managing risk and how derivatives can be used to manage risk, and this textbook aims to provide this as an outcome. Derivatives are instruments to manage financial risks if managers and retail investors understands derivatives and how it could be used to manage risk. The book divided in fourteen chapters, the chapter focuses on the present level of trading of derivatives at the Indian level and the trend being followed over the years at the major exchanges in India.

Derivatives and Risk Management is a comprehensive textbook that provides a practical and user-oriented understanding of derivatives as effective tools for managing financial risk. Recognising the increasing complexity and uncertainty of global financial markets, the book focuses on how derivatives can be used to minimise risk rather than merely explaining trading techniques. It is designed for students, managers, retail investors, and finance professionals who seek to understand the strategic role of derivatives in financial decision-making.

The book begins by introducing the concept, nature, and significance of derivatives in today's dynamic financial environment. It explains how businesses and investors are exposed to various financial risks, including market risk, interest rate risk, currency risk, and price volatility, and demonstrates how derivative instruments can help manage these uncertainties. Rather than concentrating solely on derivative pricing or speculative trading, the book emphasises their practical application in risk management and value creation.

A key strength of the text is its focus on developing users of derivatives rather than traders. It highlights that effective use of derivatives requires a clear understanding of risk exposure, hedging strategies, and financial decision-making. Readers are guided through the principles of identifying, measuring, and managing risk, enabling them to appreciate how derivative instruments contribute to organisational stability and investment protection.

Organised into **fourteen well-structured chapters**, the book systematically covers the major types of derivative instruments, their characteristics, applications, and risk management strategies. It explains the functioning of futures, options, swaps, and other derivative products while illustrating how these instruments can be employed to hedge financial risks across different market conditions.

The book also provides a detailed analysis of the **Indian derivatives market**, examining the evolution and growth of derivative trading in India. It discusses the present level of trading activity, market trends, and the performance of major Indian stock exchanges over the years. This practical perspective enables readers to understand the regulatory framework, market practices, and the increasing significance of derivatives within the Indian financial system.

Written in a clear and student-friendly style, the book combines theoretical concepts with practical insights to enhance conceptual understanding and analytical thinking. Real-world examples and contemporary market perspectives help readers relate financial theories to actual business and investment scenarios.

Overall, *Derivatives and Risk Management* serves as an essential academic and professional resource for students of commerce, management, finance, and economics, as well as for investors and financial practitioners. By focusing on the practical use of derivatives for managing financial risk and creating value, the book equips readers with the knowledge and skills needed to make informed financial decisions in an increasingly uncertain global economy.