As a professional derivative trader, you operate in financial markets where you buy and sell financial instruments whose value is derived from the performance of underlying assets, such as stocks, bonds, commodities, or market indices. Derivatives include options, futures, forwards, and swaps.
Here's an overview of what a professional derivative trader typically does:
- Introduction to Derivatives: Basic concepts, types of derivatives, and their features.
- Market Analysis: You analyze financial markets, economic indicators, and news to identify potential trading opportunities. This involves understanding market trends, volatility, and macroeconomic factors that could impact prices.
- Market Participants: Roles and responsibilities of various entities in the derivatives market, including stock exchanges, clearing corporations, and brokers.
- Trading, Clearing, and Settlement Mechanism: Procedures for trading, clearing, and settlement of derivative contracts.
- Regulatory Framework: SEBI regulations governing the derivatives market, including eligibility criteria for trading, position limits, and margin requirements.
- Risk Management: Principles of risk management in derivatives trading, including margining systems and risk management techniques.
- Trading Strategies: Commonly used trading strategies in the derivatives market, such as hedging, speculation, and arbitrage.
- Taxation: Tax implications of derivative trading for investors and traders.