Are a derivative and its underlying asset traded with the same party?

A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset (like a security) or set of assets (like an index). Common underlying instruments include bonds, commodities, currencies, interest rates, market indexes, and stocks.

What are the different types of underlying asset?

5 Different Types of Underlying Assets

• Stocks. One of the most widely used underlying assets are stocks, which is only natural given the pervasiveness of stocks in the investment world. …
• Bonds and Fixed Income Instruments. …
• Index Funds. …
• Currencies. …
• Commodities.