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Derivative Security
(redirected from Derivative contract)

   Also found in: Wikipedia 0.01 sec.
Derivative security
A financial security such as an option or future whose value is derived in part from the value and characteristics of another security, the underlying asset.

Derivative Security
Futures, forwards, options, and other securities except for regular stocks and bonds. The value of nearly all derivatives are based on an underlying asset, whether that is a stock, bond, currency, index, or something else entirely. Derivative securities may be traded on an exchange or over-the-counter. Derivatives are often traded as speculative investments or to reduce the risk of one's other positions. Prominent derivative exchanges include the Chicago Mercantile Exchange and Euronext LIFFE.


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Nevertheless, the idea behind a derivative contract is quite simple.
Those looking to avoid the mess or possibly profit from it might consider the Rydex Inverse High Yield Strategy Fund, which uses derivative contracts to benefit from defaults.
Details about the nature of these equity derivative contracts are reported in Table 1.
 
 
 
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