Derivative
A derivative is a financial contract whose value is derived from an underlying asset or group of assets, typically between two or more parties. These contracts specify a pre-agreed price and date for delivery or settlement. Common types of derivative contracts include: - Futures - Options - Forwards - Swaps. Derivatives can be traded either on an exchange or over the counter (OTC). Since their value is linked to the performance of underlying assets (such as stocks, commodities, or currencies), the price of a derivative fluctuates based on changes in the value of these underlying assets. Derivatives can be traded either on an exchange or over the counter (OTC). Since their value is linked to the performance of underlying assets (such as stocks, commodities, or currencies), the price of a derivative fluctuates based on changes in the value of these underlying assets.
Related Terms
Box Spread
A box spread is an options trading strategy combining a bull call spread and a...
High Dividend Yield Stocks
High Dividend Yield Stocks are shares of companies that pay a higher-than-average dividend relative to...
STP
A Systematic Transfer Plan (STP) is an investment strategy that allows you to transfer a...
Futures and Options
Futures and options are both types of derivative contracts, meaning their value is derived from...
Expense Ratio
Expense is the annual fee charged by a mutual fund to cover its operating costs,...
Floating Interest Rate
A floating interest rate is an interest rate that fluctuates over the tenure of a...
