Derivatives Contracts

Definition ∞ Derivatives contracts are financial agreements whose value is derived from an underlying asset, index, or rate. Common types include futures, options, and swaps, allowing parties to speculate on price movements or hedge against risk. These instruments do not involve direct ownership of the underlying asset but rather a right or obligation to transact at a future date or price. They serve as important tools for risk management and price discovery in financial markets.
Context ∞ In crypto news, derivatives contracts on digital assets have gained prominence, offering new avenues for trading and hedging volatility. Reports often cover the volume and open interest in Bitcoin or Ethereum futures, indicating market sentiment and leverage. Regulatory scrutiny surrounding these products, particularly regarding investor protection and market manipulation, is a significant ongoing discussion.