Derivative Markets
Overriding these different asset classes and their markets are the derivative markets. A derivative is a financial product which is derived from the price of other financial products. The three broad types of derivatives can be categorized as futures/forwards, options and swaps. Every asset class has derivatives of all three types. Because the derivative market is constantly evolving, there are many derivatives which don’t necessarily fall easily into these three categories, but on the whole most do.
A future and a forward are similar financial products. The difference is that futures are standardized and traded on exchanges and forwards are more tailored and do not trade on exchanges. This will be explained in more detail ...
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