The derivatives market is a financial marketplace where contracts known as derivatives are traded. These contracts derive their value from underlying assets, such as stocks, bonds, commodities, or currencies. Investors use derivatives to hedge risks or speculate on price movements without owning the actual assets. Common types of derivatives include futures, options, and swaps. Futures contracts obligate parties to buy or sell an asset at a predetermined price on a specific date, while options give the buyer the right, but not the obligation, to do so. Swaps involve exchanging cash flows or other financial instruments between parties.