A Study on Financial Derivatives (Futures & Options) with special Reference to SENSEX

Author(s)	Dr. JANARDHANUDU K, Dr. SRINIVASA RAO CH
Country	India
Abstract	The rapid growth of financial markets and the increased volatility in asset prices have led to the rise of financial derivatives as important tools for managing risk and discovering prices. In India, the start of derivatives trading was a major reform in the capital market system. Futures and Options (F&O), especially index-based derivatives, have become very popular among investors, traders, and institutions. The SENSEX, which is the benchmark index of the Bombay Stock Exchange (BSE), plays a key role as an underlying asset for derivatives trading. This study looks at the concept, growth, structure, and performance of financial derivatives, focusing on SENSEX Futures and Options. It also examines trading trends, risk-return features, and the role of SENSEX derivatives in hedging, speculation, and market efficiency. The study relies on secondary data gathered from BSE, SEBI, and published research. The findings show that SENSEX derivatives have greatly improved liquidity, transparency, and risk management in the Indian capital market, though they also create challenges due to leverage and the lack of investor awareness.
Keywords	Financial Derivatives, Futures, Options, SENSEX, Indian Capital Market, Risk Management
Field	Sociology > Banking / Finance
Published In	Volume 8, Issue 1, January-February 2026
Published On	2026-02-06

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