European Journal of Molecular & Clinical Medicine ISSN 2515-8260 Volume 7, Issue 4, 2020 1096 A PAPER ON A REVIEW ON STOCK FUTURES AND STOCK OPTIONS WITH REFERENCE TO NSE AND BSE Dr. S. Durga 1 , Dr. Venkateswararao Podile 2 , 1 Assistant Professor, K LEF, KL Business School 2 Professor, K LEF, KL Business School Derivatives which are regarded as Risk Management Tools which helps the investors to minimize different types of risks faced by them. Trading in derivatives is increasing day by day in terms of its volume which indicates the importance of derivatives. Various derivative products are emerging to meet the needs of different investors. Many types of equity derivatives etc are trading in major exchanges in India. The present paper studies the trading in Equity Derivatives in NSE & BSE. 1. DERIVATIVES The Indian securities market is rapidly changing and updating, the investors and market participants are in search of different ways by which they can hedge their risk management and their various needs can be effectively met. So, over the decades, financial markets have taken several steps towards advancement of products and offerings and so have the derivative markets. The Securities and Exchange Board of India (SEBI) started on April 12, 1992 removed the barriers in trading the exchange traded derivatives. A tewnty four-member committee was set up under the chairmanship of Dr L. C. Gupta on November 18, 1996 to set appropriate rules to trade in India. Later another committee headed by Prof. J. R.Varma studied and formulated different ways to manage risk through equity derivatives in India in the year 198. Derivatives trading commenced in India in June 2000 after SEBI granted the final approval to this effect in May 2000.1 The derivatives contract is a financial contract that derives its value from the underlying asset which may be from equity or stocks, interest rates, commodity, currency, security or bonds. In simple terms they specify the particular quantity, price and period of time to be traded. The futures are divided into stock futures, commodity futures and index futures. The stock futures are shares and debentures, whereas commodity futures are belonging to the commodities namely gold, paddy and sugar. Index futures are congregation of shares. Finally, futures are aggregation of stock futures commodity futures and index futures. The time of a futures contract is basis i.e., futures price-spot price. Basis should be zero or expiration, gross hedge scenario is arised due to variability between futures price and spot price. Based on “value at risk” concept minimum margins are fixed by the concerned stock exchange about 10 percent of the total of contract. *1. Jayanth Rama Varma, Chapter 3, Evolution and Progress of Regulatory Framework for Equity derivatives Market in India There are different types of futures markets are available like, stock future which is also called as equity future. These futures used as a risk management tools. The price of futures contract i.e. Futures price will be determined based on the expected movement in spot market or cash market, cost of carry, in terms of interest cost, storage cost and insurance cost etc., and dividend receipts.