Derivatives Markets

A derivative is a type of investment that depends on the value of something else, like a stock or an index. It's not worth anything on its own but instead gets its value from the thing it's linked to. Continue Reading Below

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Discover the definition of financial terms related to derivatives markets.

The Brace Gatarek Musiela (BGM) Model: Definition, Application, and Impact on Interest Rate Derivatives

Alessandra Nicole

The Heath-Jarrow-Morton (HJM) Model: Understanding Forward Interest Rates and Derivative Pricing

Abi Bus

Forward Rate Agreements: Definition, How They Work, Benefits and Risks

SuperMoney Team

Floating Prices in Swap Contracts: Definition, Mechanics, and FAQs

Abi Bus

Calculation Agents: Definition, Roles, and Responsibilities

Abi Bus

Non-Deliverable Swaps (NDS): What They Are, How They Work, and Real-World Examples

Alessandra Nicole

Moneyness: Definition, Examples, and Strategies

SuperMoney Team

Interest Rate Options: Definition, Examples, and Applications

SuperMoney Team

Spot Price: Definition, Importance, and Real-World Impact

Silas Bamigbola

Current Exposure Method (CEM): Definition, Application, and Considerations

Alessandra Nicole

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About Derivatives Markets

A derivative is a type of investment that depends on the value of something else, like a stock or an index. It's not worth anything on its own but instead gets its value from the thing it's linked to. Derivatives include futures and options contracts, which are agreements to buy or sell a stock, commodity, or other asset at a certain price in the future. These types of investments are traded in the derivatives market.

Futures markets are places where people trade futures contracts. Futures contracts are standardized and regulated, and trades are settled and confirmed through a clearinghouse. Options markets are similar and trade options contracts, which give the buyer the right, but not the obligation, to buy or sell an asset at a certain price. Futures and options markets trade contracts for different types of assets, like stocks, bonds, commodities, and so on.