Derivatives

Derivatives are financial contracts or instruments between two parties whose value is derived from the performance of underlying assets. These underlying assets can include bonds, currencies, stocks, interest rates, commodities, or market indices. The value of the derivative is linked to the price or performance of an external asset. Derivatives are used for hedging risks, speculating on price movements, or gaining access to otherwise hard-to-trade assets. For example, a futures contract on gold allows two parties to agree on a price for gold to be delivered at a future date, regardless of the market price at that time