Trading with Futures

Abstract

This paper examines investments through Futures trading, which involves speculating on the price of a security going up or down in the future. The study is based on Index Futures and Stock Futures. Changes in Stock market prices, interest rates, and exchange rates can have great significance on financial risk of the firms.Therefore financial instruments for the management of such risk are developed. This paper attempts on such instruments, which are called as financial derivatives. This paper also focuses on increase in the futures price along with increase in the open interest confirms an uptrend, and decrease in the open interest represents liquidation or profit booking. The present paper also contains a hypothesis "the change in future price is in direct relationship with the moment in open interest" Hypothesis is empirically tested in case of Stocks of ONGC, Reliance, Satyam, SBI, Tata Motors, Tisco, Tata Power, Maruti and Mahindra & Mahindra