The phenomenal growth of derivative markets across the globe indicates their impact on the global financial scene. As the securitie s markets continue to evolve, market participants, investors and regulators are looking at different way in which the risk management and hedging needs of investors may be effectively met through the derivative instruments. However, it is equally recognized that derivative markets present market participates and regulatory (control) issues, which must be adequately addressed if derivative markets are to gain and maintain investor confidence. And yet, more and more companies are using (ordering forced to use) futures and derivatives to stay competitive in a fast- changing word characterized by both unprecedented opportunities and unprecedented risks. Thus, the thrust of this paper is to provide a detailed study of the manner in which the market works and how the knowledge can be used to make profits and avoid losses a competitive economy setting.