A derivative security is a financial contract between two parties for buying or selling a property, assets, commodity, or other security at a predetermined price within a specific time period. 

Generally, a derivative security is a contract representing a group of underlying assets. The most common underlying assets are bonds, stocks, commodities, currencies, market index and interest rates. 

The value of a derivative security is derived from or dependent on the performance of underlying assets or group of assets. These underlying assets are traded separately from the derivatives.

Derivative securities include future contract, forward contract, options and swap and other variants of these such as synthetic collateralized debt obligations and credit default swaps.