A contract about the obligation or right to buy/sell on or before a future date. The thing being bought or sold is called the underlier.
Has a value. This derives from the value of the underlier (hence the name).
Can be almost anything but in practise normally something fungible and liquid.
Basic types (Vanillas)
quotes - The are the values someone will buy or sell them for:
- bid - price at which someone will buy
- ask/offer - the price at which someone will sell
Over the counter OTC
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