Derivative Markets

What is derivative market?

           A derivative market is market which involves a derivative contract were the value of that contract is fully depend upon the underlying asset.

For Eg : In IPL ticket the value of the ticket depend upon,  till the final match of IPL after that the value turn to zero.

Let’s take another example:

                PETROL                                                        DIESEL       

     Derivative product                                          Derivative product

 

                                                    CRUDE OIL

                                              Underlying  asset

    As change in value of crude oil will lead to change in value of its derivate product i.e petrol & diesel.

Forms of derivative

Commodity derivative

If underlying asset  are commodity like crude oil, wheat, gold , silver etc.

Financial derivative

If underlying asset currency , index, shares etc.

 


So, we can conclude  that , Value of derivate product depend upon value of underlying asset.









































































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