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Options market size

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How can that be? Largely because there are real chart of options derivatives in existence, available on virtually every possible type of investment asset, including equities, commodities, bonds, and currency.

What is the Options Market

Some market analysts even place the size of the market at more than 10 times that of the total world gross domestic product GDP. However, other researchers challenge these estimates, arguing the size of the options market size market is vastly overstated.

How Big Is the Derivatives Market?

The higher end of the estimates includes the notional value of derivative contracts. The Range of Estimates Determining the actual size of the derivatives market depends on what a person considers part of the market, and therefore, what figures go into the calculation.

The number of options contracts traded increased from 9. Both contracts are financial derivatives, used to manage financial risk and speculate on future market performance. What are derivatives? Derivatives are financial instruments that are based on an underlying asset, such as a stock price, commodity value, or currency.

The larger estimates come from adding up the notional value of all available derivatives contracts. But some analysts argue that such a calculation doesn't reflect reality—that the notional value of a derivative contract's underlying assetsthe financial instruments the derivative is pegged to, does not accurately represent the actual market value of derivative contracts based on those assets.

Derivatives themselves merely contracts between parties; they are speculations, bought, or sold as bets on the future price moves of whatever securities they're based on—hence the name 'derivative.

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An example that illustrates the vast difference between notional value and actual market value can be found in popularly traded derivatives, interest rate swaps. The large principal amounts of the underlying interest rate instruments, although usually included in the calculation of total swaps value, never actually trade hands. The options market size money traded in an interest rate swap is the vastly smaller interest payment amounts—sums that are only a fraction of the principal amount.

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The OTC derivatives market, on a notional value, is at its highest level since Interest rate derivatives make up for the majority of the OTC notional derivative value. Meanwhile, the gross value of derivatives has been falling in recent years but rebounded in The Bottom Line When the actual market value of derivatives rather than notional value is the focus, the estimate of the size of the derivatives market changes dramatically.

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However, by any calculation, the derivatives market is quite sizable and significant in the overall picture of worldwide investments. Compare Accounts.

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