Derivative

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Revision as of 15:19, 1 September 2005 by Rhody Trader (Talk | contribs)
Definition:
Financial instruments which have their value determined by (derived from) the value of an underlying instrument, figure, result, or event.


Contents

Underlying Instruments and Markets

Among the securities, instruments, and markets for which derivative securities are created and traded are:

Usage of Derivatives

Derivatives were originally created for the purposes of hedging. They maintain that focus, though speculators have taken to them as well. The appeal is that they provide those who use them the ability to target very specific objectives.

Types of Derivatives

Contracts for Difference (CFDs) can also be considered derivatives, as can convertibles.

Where to Trade Derivatives

Non-standardized derivatives trade over-the-counter and/or via the inter-bank market. Standardized derivatives are exchange traded. Some of the exchanges are:

Related T2W Resources