ABSTRACT
This study examines traders' awareness and perception towards equity derivatives trading and analyses the factors influencing their participation in the derivatives market. Equity derivatives have emerged as important financial instruments for hedging, speculation, and portfolio diversification; however, varying levels of awareness and risk perception affect their adoption among traders. The research adopts a descriptive research design and utilizes both primary and secondary data sources. Primary data were collected through a structured questionnaire from 73 respondents using a non-probability convenience sampling method. Statistical tools such as Chi-square tests, ANOVA, and regression analysis were employed to test the hypotheses. The findings reveal that higher awareness of equity derivatives significantly increases traders' participation in derivatives trading. Traders who perceive derivatives as highly risky are less likely to participate, whereas those with a greater interest in learning about derivatives show higher trading involvement. Investment objectives such as speculation and hedging were found to positively influence participation in derivatives trading. However, demographic factors including age, gender, and occupation did not exhibit a statistically significant impact on investment behaviour. The study highlights the importance of financial literacy, investor education, and awareness programs in enhancing informed participation in the equity derivatives market. The findings provide valuable insights for investors, financial institutions, policymakers, and market regulators seeking to promote responsible and effective derivatives trading.
Keywords: Equity Derivatives, Traders’ Awareness, Risk Perception, Derivatives Trading, Investment Behaviour, Financial Literacy, Hedging, Speculation, Investor Participation, Financial Markets
