Derivatives trading: five unusual types you can trade

Derivatives take many forms – from well-known instruments such as futures and options to newer contracts linked to weather, freight or even cryptocurrencies. While most are used to manage risk or gain market exposure, some have developed in more specialised and unconventional ways.

By Dan Mitchell14:41 (UTC), 27 November 2025

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The key to understanding derivatives is knowing that these financial products are just what they sound like – they derive their value from something else: the underlying asset. That asset might be a stock, an index, a commodity, or even weather data.

While many traders are familiar with common derivatives such as futures, options and contracts for difference (CFDs), the market now extends far beyond these traditional instruments. As of November 2025, derivatives include everything from crypto perpetual futures to catastrophe bonds.

Five unusual types of derivatives

Below, we explore five of the more unusual examples that show how broad and adaptable the derivatives market has become.

1. Weather derivatives

Traditional insurance covers extreme weather events like hurricanes or floods. But for industries reliant on stable conditions – such as agriculture, energy and tourism – even moderate changes can cause financial disruption.

That’s where weather derivatives come in. These contracts allow companies to hedge against variations in rainfall, temperature or wind levels that might affect their income.

Once limited to CME’s rainfall contracts, weather trading has since gone global. Exchanges including the Singapore Exchange (SGX), ADE and the Baltic Exchange now offer a wider range of weather-linked products that cover factors such as energy output, logistics costs or crop yield volatility.

Trading volumes in 2025 rose sharply as firms sought ways to manage climate-related and supply-chain risks.

2. Bermuda options

An option gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a specified date.

Bermuda options sit between American and European styles. While European options can only be exercised at expiry and American options at any time before, Bermuda options allow exercise on pre-agreed dates within the contract period.

Their flexibility makes them popular with banks, hedge funds and proprietary trading firms such as Susquehanna and XR Trading, which use hybrid structures to manage complex portfolios.

In 2025, newer variants such as autocallables and rainbow options have gained traction in institutional portfolios, narrowing the distinction between structured products and standard derivatives.

3. Freight and logistics derivatives

Freight derivatives help traders and shipping companies manage exposure to fluctuations in the cost of transporting goods. The Baltic Exchange remains the main venue, but recent years have seen rapid innovation.

New fintech-driven platforms such as ADE now offer digital freight swaps and algorithmically priced forward freight agreements (FFAs), often linked to the Baltic Dry Index or tailored indices that track specific routes or energy cargoes.

Amid global logistics challenges, these products have become a key risk-management tool for energy firms, carriers and institutional traders. Freight derivatives illustrate how real-world supply chains and financial markets are becoming increasingly connected.

4. Prediction and catastrophe-linked contracts

Some derivatives have long tested regulatory and ethical limits. In the early 2000s, the US explored policy-analysis markets and movie-revenue futures – contracts based on political or entertainment outcomes. Both were ultimately banned under the Dodd-Frank Act, and similar restrictions remain in place globally.

In 2025, a new generation of data-driven prediction contracts has emerged. These are linked not to political events but to measurable variables such as energy demand, rainfall totals or inflation outcomes. They are closely monitored by regulators and typically used for research or hedging purposes rather than retail trading.

Meanwhile, catastrophe bonds (cat bonds) have become more mainstream. Issued by insurers or governments, they pay high yields unless a predefined catastrophic event occurs. Investors take on the associated risk in exchange for potential returns.

Together with power-plant operation swaps and other niche contracts, cat bonds highlight the pace of innovation in today’s financial markets – often faster than regulation can adapt.

5. Crypto perpetual futures

One of the fastest-growing areas of derivatives trading is crypto perpetual futures, or 'perps'. These are similar to standard futures but have no expiry date, allowing positions to remain open indefinitely.

Initially confined to unregulated platforms, 2025 has brought stronger oversight and growing institutional interest. Regulated venues such as SGX Derivatives, Bitnomial and Coinbase Derivatives now provide liquidity and compliance standards comparable to those in traditional markets.

Trading volumes have increased significantly, reflecting both volatility in digital assets and a more mature market structure. Many firms use perps to hedge exposure or manage funding-rate differentials, demonstrating how quickly crypto derivatives have evolved.

The future of unconventional derivatives

Derivatives continue to evolve as technology, regulation and global risk profiles change. AI-driven modelling, algorithmic trading and climate finance are all contributing to the sector’s growth and diversification.

From crypto perps to freight and weather contracts, almost any measurable variable – from temperature to transport cost – can now underpin a tradable structure.

As always, these products require a solid understanding and careful risk management. For a detailed overview of how derivatives work in practice, visit our comprehensive derivatives trading guide.

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FAQ

What are weather derivatives and why do companies use them?

Weather derivatives are financial contracts that help businesses manage the financial impact of changing weather conditions, hedging against moderate variations in rainfall, temperature or wind speed rather than extreme events. Companies in sectors such as agriculture, energy and logistics use them to reduce exposure to abnormal weather patterns, and in 2025, markets including SGX Derivatives and ADE expanded weather-linked trading beyond traditional CME products, offering broader coverage for firms affected by climate volatility.

How do crypto perpetual futures differ from regular futures contracts?

Crypto perpetual futures – or ‘perps’ – function like standard futures but have no expiry date, allowing positions to remain open indefinitely while a funding rate keeps prices aligned with the spot market. By 2025, regulated exchanges such as SGX Derivatives, Bitnomial and Coinbase Derivatives improved access and transparency for institutional users, making these products suitable for hedging or managing exposure to crypto-market volatility, rather than for speculation alone.

Are policy analysis and movie futures still banned?

Yes. Futures based on political or entertainment outcomes, often known as policy analysis or movie futures, remain banned globally. First introduced in the early 2000s, they were prohibited under the Dodd–Frank Act because of regulatory and ethical concerns. A newer class of ‘prediction contracts’ has since emerged, limited to measurable data such as energy demand or inflation, and subject to tight regulatory supervision.

Are CFDs a type of derivative?

Yes, contracts for difference (CFDs) are a type of derivative that allow traders to speculate on the price movement of an underlying asset – such as a share, index, or commodity – without owning it. The profit or loss reflects the difference between opening and closing prices, and CFDs can be used to go long or short. While flexible, they involve significant risk, as CFDs are traded on margin, and leverage amplifies both profits and losses.