What are the Types of Derivatives?

Before involving in the Derivatives Trading, it's important to understand the different types of Derivatives.


The following are the types of Derivatives Contracts:

  • Futures Contracts: An agreement to buy or sell an asset at a predetermined price on a specified future date.
  • Options Contracts: Contracts that give the holder the right (but not the obligation) to buy or sell an asset at a specified price within a certain time frame. 

Understanding these types of derivatives empowers investors and institutions to employ these instruments effectively in their financial strategies, whether for hedging against risks, gaining exposure or different assets, or seeking profit through speculations.

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