View all categories

What are interest rate derivatives and how can I trade them on Zerodha Kite?

Interest Rate Derivatives are standardised contracts traded on a recognised stock exchange, and the value of the contracts is derived from interest rates or the prices of interest-rate securities.

Just like any equity or index contracts, the interest rate derivatives include futures and options.

In the Indian context, interest rate derivatives are based on the interest rates on money, interbank money rates, and largely bonds where the underlying interest rate is based on a particular debt security.

To trade in Interest Rate Derivatives in the Kite, you have to get your Currency derivatives segments enabled .

Click here to know the steps for activating the currency segment if it’s not activated for your account.

You can type “ Interest Rate Series ” to see the interest rate contract in the drop-down, and you can select the contract you want to trade.

Note:

  1. All the Interest rate derivative contracts are cash-settled, and settlement depends on the type of contract you are trading.
  2. Interest rate derivatives have three serial monthly contracts 1-month (near-month), 2-month (mid-month) and 3-month (far-month). and additionally 3 quarterly contracts of the cycle March/June/September/December
  3. You can search the underlying in the BSE website

To know more about futures pricing check this chapter on varsity.