An exchange traded derivative is a financial instrument that trades on a regulated exchange and whose value is based on the value of another asset. Simply put, these are derivatives that are traded in a regulated fashion. Exchange traded derivatives have become increasingly popular because The most common derivatives found in exchange-traded funds are futures, which are used particularly often in commodity ETFs so that actual physical commodities don't have to be taken possession of and stored. But ETFs also utilize forwards, swaps, and options (calls and puts). Beyond the world of exchange-traded funds, an entirely different universe is filled with things called exchange-traded derivatives. A derivative is a financial instrument that has no real value in and of itself; rather, its value is directly tied to some underlying item of value, be it a commodity, a stock, a currency, or an ETF.