Hedging Strategy Influencing Derivative Investment on Investors

The paper titled “Hedging Strategy influence Derivative Investment on Investors�?. Generally Speaking in India Derivative contracts have not been majorly focused by investors, because of certain myths in the minds of people. Therefore Derivative Investment is not taken largely as on investment option by Individual investors. Many authors stated that derivative market is the marketplace in which traders come to exchange risks. In worldwide economy with divergent hazard exposures, derivatives permit businesses and traders to defend themselves from rapid price fluctuations and negative events. The aim of the article is to identify the major risk and hedging strategy in derivative market. In Derivative Contracts as a high risk that are Market risk, Liquidity risk, Credit risk, Counterparty risk, Legal risk and Transaction Risk. Pricing risk and systematic risk is also very important. Derivative investor must analyze the market and make the decisions while trading this will undergoes the uncertainty. Derivatives plays a major role for minimizing the risk involved in the marking an investment in futures contracts by expecting to get good result. The investors should also invest in options contracts which help to reduce the risk by use of hedging strategy. Hedging strategy is used for reducing the risk and maximization of profits. Though the futures contracts are subjected to high level the loss can be reduced to an extent by using the hedging strategy.