Derivatives Market

The derivatives market is a segment of the capital markets where financial contracts known as derivatives are traded. These contracts derive their value from underlying assets like stocks, bonds, or commodities. Common types of derivatives include options and futures. Investors use derivatives to hedge against risks, speculate on price movements, or enhance returns. Essentially, they provide tools for managing financial exposure, allowing participants to lock in prices or protect against losses without directly buying or selling the underlying asset. The market can be complex, but it plays a vital role in global finance by increasing liquidity and stability.