Financial derivatives by definition, and in classical terms, are
contracts between two parties wherein one-party benefits at the
expense of the other when predicting the future value of a
financial asset. A financial asset can be a commodity (e.g. Gold,
Oil), a stock (e.g. Apple, Amazon), an index (e.g. NASDAQ, FTSE
100), a foreign exchange (forex) pair (e.g. USDGBP, EURCHF),
cryptocurrency (e.g. Bitcoin, Ether), etc.
Who issues derivative contracts?
These financial derivative contracts are traditionally/currently
issued by centralized institutions and banks (e.g. Goldman Sachs,
UBS, etc.) and are sold to individual market participants, be it
traders or other institutions. When derivative contracts are sold
between two large companies or institutions, this gets termed as
institutional derivatives trade, commonly referred to as OTC or
Over the Counter. When these derivative contracts are sold to
individual market traders these are termed as retail
