Derivative Market

The derivative market is a financial marketplace where contracts called derivatives are traded. These contracts derive their value from underlying assets, such as stocks, bonds, or commodities. Traders use derivatives to hedge risks, speculate on price movements, or leverage their investments. Common types include options and futures, which allow investors to buy or sell assets at predetermined prices in the future. While they can enhance returns, derivatives also carry significant risks, as they can amplify losses. Overall, the derivative market plays a crucial role in financial markets for risk management and investment strategies.