Derivatives

In the maritime context, derivatives refer to financial instruments whose value is derived from the value of another asset, which in this case is typically a commodity like oil or a freight rate. These instruments are used as a risk management tool to hedge against fluctuations in freight rates and fuel prices. They allow maritime companies to lock in a price or rate for a future date, providing a level of certainty and stability in an industry that is often subject to volatile market conditions. There are several types of maritime derivatives, including Freight Rate Derivatives, Fuel Price Derivatives, and Currency Derivatives. Freight Rate Derivatives are contracts that are used to hedge against the risk of fluctuating freight rates. Fuel Price Derivatives are used to hedge against the risk of changing fuel prices. Currency Derivatives are used to hedge against the risk of fluctuating currency exchange rates. These derivatives are traded on various exchanges and over-the-counter markets around the world.