derivative


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Derivative

A financial contract whose value is based on, or "derived" from, a traditional security (such as a stock or bond), an asset (such as a commodity), or a market index.

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.

derivative

An asset that derives its value from another asset. For example, a call option on the stock of Coca-Cola is a derivative security that obtains value from the shares of Coca-Cola that can be purchased with the call option. Call options, put options, convertible bonds, futures contracts, and convertible preferred stock are examples of derivatives. A derivative can be either a risky or low-risk investment, depending upon the type of derivative and how it is used. See also underlying asset.

Derivative.

Derivatives are financial products, such as futures contracts, options, and mortgage-backed securities. Most of derivatives' value is based on the value of an underlying security, commodity, or other financial instrument.

For example, the changing value of a crude oil futures contract depends primarily on the upward or downward movement of oil prices.

An equity option's value is determined by the relationship between its strike price and the value of the underlying stock, the time until expiration, and the stock's volatility.

Certain investors, called hedgers, are interested in the underlying instrument. For example, a baking company might buy wheat futures to help estimate the cost of producing its bread in the months to come.

Other investors, called speculators, are concerned with the profit to be made by buying and selling the contract at the most opportune time. Listed derivatives are traded on organized exchanges or markets. Other derivatives are traded over-the-counter (OTC) and in private transactions.

derivative

a financial instrument such as an OPTION or SWAP whose value is derived from some other financial asset (for example, a STOCK or SHARE) or indices (for example, a price index for a commodity such as cocoa). Derivatives are traded on the FORWARD MARKETS and are used by businesses and dealers to ‘hedge’ against future movements in share, commodity etc. prices and by speculators seeking to secure windfall profits. See LONDON INTERNATIONAL FINANCIAL FUTURES EXCHANGE (LIFFE), EUREX.

derivative

a financial instrument such as an OPTION or SWAP the value of which is derived from some other financial asset (for example, a STOCK or SHARE) or indices (for example, a price index for a commodity such as cocoa). Derivatives are traded on the FUTURES MARKETS and are used by businesses and dealers to ‘hedge’ against future movements in share, commodity, etc., prices and by speculators seeking to secure windfall profits. See LONDON INTERNATIONAL FINANCIAL FUTURES EXCHANGE (LIFFE), STOCK EXCHANGE.
References in periodicals archive ?
Non-hedge purchase contracts are similar except interest rate contracts are a significantly higher percentage resulting in equity contracts being an insignificant form of derivative investment..
Using derivative products and computer-based evaluating strategies also help establishing the price of an asset.
In the study, the researchers examined the value of publicly traded electric and gas utilities in the United States both before and after a weather derivatives market opened in the late 1990s.
where A and B are functions of [eta] and its local fractional derivatives.
For the states that allow credit unions to engage in derivatives activity, NCUA's proposed rule would preempt state authority and limit an available tool to state credit unions to mitigate interest rate risk.
Netted fair value offsets derivative assets against derivative liabilities that are outstanding with the same counterparty, even if the assets and liabilities relate to completely different classes of derivatives and risk profiles.
Computing the partial derivative of (3) with respect to x and taking the first approximation with respect to [tau], one gets
There are six main categories of derivatives: foreign exchange, interest rate, equity, commodity, credit default swap, and other.
There are more than 10 licensed derivative brokerage firms in Cambodia and four licensed central counterparties.
The average interest rate in the loan portfolio, including the effect of interest-rate derivatives, is now 1.39%, as compared to 2.35% as of end September 2018.
Derivatives may be traded in exchanges (or intermediaries) or over-the-counter.
Valley Cottage, NY, October 12, 2016 --(PR.com)-- Demand for bromine derivatives will continue to surge owing to increasing adoption as reactants in the manufacturing of agrochemicals, water disinfectants, dyes and photographic chemicals.