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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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Encyclopedia Articles

Discover the definition of financial terms related to derivatives markets.

Basket Options: Understanding, Application, and Examples Thumbnail

Basket Options: Understanding, Application, and Examples

Silas Bamigbola

Vanilla Options: Definition, Uses and Examples Thumbnail

Vanilla Options: Definition, Uses and Examples

Silas Bamigbola

Futures Strips: Definition, Applications, and Risk Management Strategies Thumbnail

Futures Strips: Definition, Applications, and Risk Management Strategies

Alessandra Nicole

Bank Bill Swap Rate (BBSW): Understanding, Calculation, and Application Thumbnail

Bank Bill Swap Rate (BBSW): Understanding, Calculation, and Application

SuperMoney Team

Understanding Fed Funds Futures: Functionality, Market Dynamics, and Strategic Insights Thumbnail

Understanding Fed Funds Futures: Functionality, Market Dynamics, and Strategic Insights

Alessandra Nicole

Last Trading Day: Definition, Significance, and Examples Thumbnail

Last Trading Day: Definition, Significance, and Examples

Silas Bamigbola

Options Trading: Understanding the Boston Options Exchange (BOX) Thumbnail

Options Trading: Understanding the Boston Options Exchange (BOX)

Alessandra Nicole

Back Fees: Definition, Examples, and Impact Thumbnail

Back Fees: Definition, Examples, and Impact

SuperMoney Team

Contingent Credit Default Swaps: Definition, Functionality, and Application Thumbnail

Contingent Credit Default Swaps: Definition, Functionality, and Application

Alessandra Nicole

Double No-Touch Options: Definition, Applications, and Risk Management Thumbnail

Double No-Touch Options: Definition, Applications, and Risk Management

Abi Bus

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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.