Short-term financial instruments with a set expiration date are known as derivative contracts. Stocks, commodities, money, indexes, exchange rates, and even interest rates can function as the underlying asset. Derivative trading entails buying and selling financial contracts in the market. By foreseeing how the price of the underlying asset will change in the future, you can profit from derivatives.

Derivative contracts are subdivided: futures and options. Similarly, options are subdivided: call options and put options.