In this the stakeholders agree to sell the particular security for a fixed price within the stipulated time frame. They remain the same in spite of the fluctuations of the market. This allows for the stakeholders involved in the process to minimize the risks involved. In the markets, if the investors purchase the right to buy an asset within a time frame at one price he has essentially purchased the call options (Bernanke, 2006). If he purchases the right to sell the asset value for a particular price he has purchased the put option. These are the two kinds of options that are available for the derivative.
In this kind of derivative the stakeholders agree to swap the benefits of the particular derivative. This would allow the stakeholders to mines risk in the process.
They also work in the same underlying theme as the Options but the concept of security is changed in this factor (Bernanke, 2006). There is more importance given to maintaining the fixed price and the fixed interest rate of the security. It allows the investor to make future financial securities in the markets as well.