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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.

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Contract Markets: Explained, Functions, and Historical Evolution Thumbnail

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Commodity Futures Trading Commission (CFTC): Understanding its Role, Technological Adaptations, and Notable Cases Thumbnail

Commodity Futures Trading Commission (CFTC): Understanding its Role, Technological Adaptations, and Notable Cases

SuperMoney Team

Chicago Board of Trade (CBOT): Evolution, Impact, and Real-World Applications Thumbnail

Chicago Board of Trade (CBOT): Evolution, Impact, and Real-World Applications

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The Montréal Exchange (MX): Definition, How It Works, Market Offerings, and More Thumbnail

The Montréal Exchange (MX): Definition, How It Works, Market Offerings, and More

Abi Bus

Offset Transactions: Understanding, Implementation, and Risk Management Thumbnail

Offset Transactions: Understanding, Implementation, and Risk Management

Abi Bus

Swap Dealers: Roles, Risks, and Real-world Examples Thumbnail

Swap Dealers: Roles, Risks, and Real-world Examples

Silas Bamigbola

Freight Derivatives: Definition, Mechanisms, and Market Dynamics Thumbnail

Freight Derivatives: Definition, Mechanisms, and Market Dynamics

Alessandra Nicole

Neutral Trading Strategies: Definition, Implementation, and Pros & Cons Thumbnail

Neutral Trading Strategies: Definition, Implementation, and Pros & Cons

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.