All Courses
AI Career Planner
1:1 Coaching/Mentoring
Job Board
SQL
HTML/CSS/JS
Coding
Settings
LogoutA derivative is a contract among 2 or more entities for whom the value is determined by an underlying financial instrument, index, or security that has been agreed upon, and the trade of these is known as derivative trading.
Derivatives are contracts between two parties, every contract has its own contract specification such as expiry date, strike price, lot size and underlying asset.
Derivative contract value is derived from the underlying asset’s price. Example of Derivatives are Futures and Options contracts on stock index, stocks, commodities and Currencies.
Two major types of derivative instruments are Futures and Option contracts. Derivative trading means buying or selling of futures or options contracts to gain profit from the movement of underlying asset price.