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  1. Home
  2. /Glossary
  3. /Derivatives
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Derivatives

Financial contracts whose value is based on an underlying asset.

Definition

Financial contracts whose value is based on an underlying asset. Futures, options, and perpetual swaps are all derivatives. They let traders speculate on price movements or hedge existing positions without owning the actual asset.

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Related Terms

Futures

Contracts to buy or sell an asset at a specific price on a future date.

Options

Contracts giving the right, but not obligation, to buy (call) or sell (put) an asset at a set price before expiration.

Perpetual Swap

A derivative contract similar to futures but with no expiration date.

Accumulation Phase

A period when smart money quietly buys up an asset before a major price move.

Annualized Return

The average yearly return on an investment, calculated to account for compounding.

Arbitrage

Profiting from price differences of the same asset across different markets.

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