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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.

Pre-Arranged Trading: Definition, Benefits, and Regulatory Considerations Thumbnail

Pre-Arranged Trading: Definition, Benefits, and Regulatory Considerations

SuperMoney Team

Down-and-Out Options: Understanding, Applications, and Risk Analysis Thumbnail

Down-and-Out Options: Understanding, Applications, and Risk Analysis

Abi Bus

Variable Ratio Writes: Understanding the Strategy, Real-World Application, and Risks Thumbnail

Variable Ratio Writes: Understanding the Strategy, Real-World Application, and Risks

Alessandra Nicole

Black's Model: Definition, Applications, and Examples Thumbnail

Black's Model: Definition, Applications, and Examples

SuperMoney Team

Horizontal Spread: Definition, Strategies, and Examples Thumbnail

Horizontal Spread: Definition, Strategies, and Examples

Dan Agbo

Vomma: Definition, Application, and Real-World Insights Thumbnail

Vomma: Definition, Application, and Real-World Insights

Silas Bamigbola

Delivery Options: Understanding, Examples, and Implications Thumbnail

Delivery Options: Understanding, Examples, and Implications

Silas Bamigbola

Roll Yield: Maximizing Returns in Futures Trading Thumbnail

Roll Yield: Maximizing Returns in Futures Trading

SuperMoney Team

Curve Steepener Trades: Strategies, Real-world Examples, and Considerations Thumbnail

Curve Steepener Trades: Strategies, Real-world Examples, and Considerations

SuperMoney Team

Stochastic Volatility: Understanding, Applications, and Real-world Scenarios Thumbnail

Stochastic Volatility: Understanding, Applications, and Real-world Scenarios

Silas Bamigbola

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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.