The Basic Dynamics Of The Derivatives Market

Abstract

Derivatives have of recent been the hot topic amongst all those at all interested in the field of financial. Investment bankers, government officials, even small time investors all have an opinion on these financial tools. What I hope to accomplish in this paper is to cut through much of the complicated mathematical and economic jargon often associated with discussions on derivative trading, and present it in a light that can be easily understood by anyone with even the most limited background in economics or finance. I also will look at one particular derivative exchange and study the methods they employ to assure safe and secure trading. This I believe will allow the reader to understand why derivatives have seen explosive growth recently, and why this growth is necessary for the long term health of an open and expanding international trading arena.