A derivative is a security that derives value from an underlying asset. An underlying asset could be an equity share, debt instrument, a currency or a commodity. Derivatives deal with an agreement to trade at a future date or at a certain price.
There are two types of derivative instruments. Futures and options. Futures allow you to bet on future trends in prices of an underlying instrument at a fraction of the cost of that instrument. Options give you an option to buy or sell the stock, commodity or a debt instrument at a target price. If the price of a stock is Rs 100, you expect it to go up to Rs 110 in a month’s time, then you buy a contract at Rs 100 today and agree to sell it at Rs 110 at the end of the month.
ATON helps you to fill and the Know Your Client (KYC) form if you are a first time investor, along with other forms for purchasing the contract you wish. You are allotted a client identification number, after which you must deposit cash to initiate trade.