An equity derivative is a financial instrument whose value is derived from the price of an underlying equity security, such as a stock or stock index. Equity derivatives include options, futures, forwards, and swaps, which allow investors to speculate on or hedge against movements in equity prices without owning the underlying assets. Equity derivatives offer flexibility, leverage, and risk management benefits, enabling investors to profit from price fluctuations, enhance portfolio returns, or protect against adverse market conditions. They are traded on exchanges or over-the-counter (OTC) markets and play a vital role in financial markets for price discovery, liquidity provision, and risk transfer.