An Index is a basket of securities and the average price movement of the basket of securities indicates the index movement, whether upwards or downwards The leading Indices in the Indian markets are based on BSE( e.g. BSE SENSEX) and NSE Exchanges(e.g. NSE NIFTY) . These indices are a reflection of the overall price movement in the market.

It is a product whose value is derived from the value of one or more basic variables, which is called underlying. The underlying asset can be equity, commodity or any other asset. These products had initially emerged as hedging devices to safe guard an individual/ organization from the volatility of commodity prices over a period of time. Financial derivatives gained momentum post-1970 period due to growing instability in the financial markets. However, since their emergence, these products have become very popular.