Main types
Representative derivatives include "futures," which promise a future trade in advance; "options," which trade the right to buy or sell; and "swaps," which exchange interest rates or currencies. Individual investors who use derivatives mainly trade stock index futures and options.
What to keep in mind
Derivatives are often leveraged trades that use margin deposits, meaning gains and losses can be magnified relative to the movement of the underlying asset. While they can be used for both risk hedging and speculation, their mechanics are complex, requiring more careful understanding and risk management than trading with physical assets.