Futures and Options

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Derivatives Market.

In the financial world, we find various investment instruments called derivatives. It is defined as financial derivative or derivative financial products to those whose value is based on the price of another asset. This means that financial derivatives are instruments whose price or value is not determined directly but depend on the price of another asset which we call the underlying asset. The underlying asset can be a stock, a stock index, a commodity or any other financial asset such as currencies, bonds and interest rates.
The main function of the derivatives market is to provide financial investment instruments and provide for adequate coverage of risk management.
Among the most popular underlying asset find the actions of the stock exchanges, currencies, stock indexes, the values of fixed income to commodities, and interest rates.

Main features of financial derivatives.
Financial derivatives have the following general characteristics, namely:
Financial derivatives require very little initial investment compared to other types of contracts that have a similar response to changes in general market conditions. This phenomenon allows the investor to have higher profits and higher losses if the transaction is not developed as I thought.
The value of the derivative changes in response to changes in the price of the underlying asset. Currently there are derivatives on all asset classes such as currencies, commodities, stocks, stock indices, precious metals, etc.
Derivatives can be traded both organized stock exchanges or organized or not also called counter markets.
Like any contract, the derivatives are settled at a future date.

Role of Financial Derivatives.
We can classify financial derivatives based on different parameters. The most common are:

1. Derivatives according to the type of contract involved:
a. Options.
b. Forwards.
c. Contracts for difference.
d. SWAPS.

2.

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