Derivatives that trade on an exchange are called exchange traded derivatives, whereas privately negotiated derivative contracts are called OTC contracts.

Since there is no exchange involved in OTC, the contracts are directly settled between the contracting parties.

Theta of a portfolio of options, is the rate of change of the value of the portfolio with respect to the passage of time with all else remaining the same.

Theta is  the change in the portfolio value when one day passes with all else remaining the same 

The India Index Services Limited (IISL), a joint venture between the NSE and CRISIL.

It introduced the free float market capitalization methodology for its main four indices, viz., S&P CNX Nifty,S&P CNX Defty, CNX Nifty Junior and CNX 100.

In the F&O trading software, a trading member has the facility of defining a hierarchy amongst users of the system.

This hierarchy comprises Corporate Manager, Branch Manager, Dealer and Admin.

On NSE, Option Contracts are available for 3 months. As soon as a particular month gets over (ie. last thrusday) the next day new Option Contracts will be available for the third month.

For eg. lets assume three contracts are currently trading ie. March, April and May. The March contract will expire on last Thrusday of March. So on the next day ie. Friday, new contracts will be available for June.

Arbitrageurs use price difference in two markets to make profits. Speculators take a call on the future direction of the market and buy and sell accordingly. Hedgers are investors who would like to mangage their risks. All three of them are active in the derivatives market in one way or other.

If the Volatility of an instrument is higher, this means trading in it carries a lot of risk which in turn will lead to higher option premiums and vice versa. So volatility definitely has an affect on the option pricing.

Pro means that the orders are entered on the trading member’s own account.

Cli means that the trading member enters the orders on behalf of a client.

There is nothing as SLF.

Mr Chirag is a buyer of PQR Stock. If the market falls his stock can also fall. So to safe gaurd himself he will create a hedge by shorting / selling index futures.

Basis is defined as the futures price minus the spot price. For eg. Reliance is quoted at Rs 900 in spot market and Rs 905 in current month future, then Rs 5 is the basis.

Cost of Carry is similar to basis but it also includes the storage cost plus the interest that is paid to finance the asset less the income earned on the asset.