Value is derived from other thing.
Types:
- Forward
- Futures
- Swaps
- Options
Forward and Swaps
Forward contract is you think price will go up in the future. Today the price is 10 but you believe it will go to 20 in next 3 months. You put the contract for 15 and wait for it. If it goes up you’ll get a profit of 5. otherwise loss.
Types of Forward
- This month
- Next Month
- Far Month
Futures
We have to but it at the end of the month. But these contract in itself are tradable.
Options
options are buying and selling
Call(BUY) and pull(SELL)