Abstract: Commodity derivatives such as futures or options are a powerful technique through which hedging, speculation, investment and arbitrage takes place in a modern economy. The major products of the commodity derivatives industry worldwide, is Index derivatives. Internationally, trading volume on index derivatives is multi times larger than that of commodity derivatives. Index Derivatives are mainly traded by professional traders, investors and portfolio managers to protect commodity portfolio, to arrange cost-effective exposure to an index whilst purchasing the underlying commodity, to take a trading view on the direction of the market. In this paper the study focused on importance of index derivatives in commodity portfolio construction and impact of index derivatives on risk and return.
Keywords: Commodity, Derivatives, Index-Based derivatives, Risk, Return, indices, Volatility, Risk Management.
Title: INDEX-BASED COMMODITY DERIVATIVES: MAKING THINGS DELIVERABLE
Author: SATHISHA H K
International Journal of Interdisciplinary Research and Innovations
ISSN 2348-1218 (print), ISSN 2348-1226 (online)
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