Equity Derivative TradingThe second and most important segment for the capital markets is the derivative segment. While under the cash segment all unsquared trades (net Positions) for the day have to be settled by delivery the derivative segment allows one to trade one to three months contracts in specified securities. Besides the investors can also trade in stock options and can hedge his portfolio or take a leveraged position.
The segmentalso allows you to trade in Indices and their options wherein contracts can run for one month to one year.
All positions in the segment have to be settled for mark to market losses on daily basis and all positions has to be backed by adequate margins as stipulated by NSE from time to time.
It is advised to trade with caution in the derivative segment as overleveraged positions get squared off in a volatile market for shortfall in margins or funds shortage for paying mark to market losses.