‘Derivatives’ is a collective term that refers to a wide range of financial instruments and the values of these instruments are derived from underlying assets, indices or market securities. Commodities, bonds, currencies and stocks comprise some of these underlying assets. Rice futures are one of the oldest derivatives in the world. The two broad categories of derivatives include ‘lock’ and ‘option’ products. Derivatives are primarily used for the purposes of risk management and speculation. Investors typically use derivatives for a variety of purposes such as hedging or mitigating risks, obtaining leverage and for speculation purposes. Hide this