The study of the impact of derivatives on the volatility of large and medium capitalization companies’ stock return. The study presents an overview of regulatory framework of derivatives market in India. The book analyse the impact of derivatives on the volatility of stock returns of S&P CNX Nifty-50 and 10 large capitalization companies. One of the objectives of the analyses is to find the impact of derivatives on the volatility of stock returns of Nifty MidCap-50 and 10 medium capitalization companies. This study also presents a comparative analysis between 10 large capitalisation companies and 10 medium capitalization companies. In the post derivatives period, Nifty Midcap-50 has experienced decreased returns with increase in standard deviation. The results of the study indicates that introduction of derivatives has positive impact on the volatility of Midcap companies as the volatility of S&P CNX Midcap-50 Index volatility has decreased to a great extent in the post-derivatives period. It was observed that there is significant difference between S&P CNX Nifty-50 index and S&P CNX Nifty Midcap-50 index in respect of volumes of transactions