Abstract
Abstract: The field of finance has evolved significantly over the years, and with the advent of behavioural finance, a new perspective has emerged in the way market participants behave and make decisions. This article conceptually explores the implications of behavioural finance in the derivatives segment, which is a complex and sophisticated financial instrument that allows investors to hedge their positions, speculate, and manage risk. The article provides an overview of traditional finance theory and introduces the concepts of behavioural finance, followed by the various behavioural biases that can affect decisionmaking in the derivative market. Finally, the article concludes by highlighting the potential benefits of incorporating behavioural finance into the derivatives segment.
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