Futures and options are different from stocks, bonds and mutual funds, because they are zero sum markets. In other words, for every dollar somebody makes, somebody else loses a dollar. In the last two decades, the fastest growing global financial markets have been futures and swaps. Apart from the currency markets, these are now the largest markets in the world. Like banking and securities, trading in financial derivatives is also distanceless and borderless.
Financial speculators play an important role in the trading of financial derivatives.
They keep buying and selling the contracts, depending on their perception of movements on the market. Rumours play an important role in decision making. Thus derivatives tend to be very volatile and risk prone. With the globalisation of these markets, any major loss can have immediate world-wide repercussions. Similar incidents have also occurred in the recent past, giving rise to apprehension that financial derivatives trading could seriously jeopardise the global financial system.