Derivatives Market

The derivatives market is a financial marketplace where derivative contracts, such as options, futures, and swaps, are bought and sold. These markets allow participants to trade based on the future price movements of an underlying asset, such as stocks, commodities, currencies, or interest rates. The derivatives market is divided into two main categories: exchange-traded derivatives (ETDs), which are standardized and traded on formal exchanges, and over-the-counter (OTC) derivatives, which are privately negotiated between parties.

Example

The Chicago Mercantile Exchange (CME) is one of the largest derivatives exchanges in the world, offering futures and options contracts on a wide range of assets.