The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets. It is a contract between two parties that derives its value/price from an underlying asset. The most common types are futures, options, forwards, and swaps. It is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset (like a security) or set of assets (like an index). Common underlying instruments include bonds, commodities, currencies, interest rates, market indexes, and stocks. It is basically is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, index, or security.
The market can be divided into two, that for exchange-traded and that for over-the-counter derivatives. The legal nature of these products is very different as well as the way they are traded, though many market participants are active in both. This contributes towards the GDP and the economy of the country. It is one of the important segments of the commodity market. It is an important factor in national income.
It includes the followings:
