Derivative

A derivative is a financial contract with a value that depends on an asset, group of assets, or an index. These contracts can be traded on stock exchanges or over-the-counter (OTC). Derivatives are used to access multiple share markets and can be used for managing risk, hedging, or speculative reasons. They come in different types, including futures, options, swaps and forwards. While exchange-traded derivatives are regulated and standardised, some OTC derivatives are not, which means they can carry more risk.