A Derivatives Primer

The quick introductory primer on derivatives for every investor and financial professional.

Derivatives markets dwarf other markets: The best estimate of their size is $300 trillion. For comparison, the value of all NYSE-listed U.S. equities is about $16 trillion. Because derivatives introduce massive leverage into the financial system, and because these markets are so large, regulators are concerned about derivatives’ implications. The market can be organized into three groups: options, futures, and structures.