what is a derivative in securities market?

Answer 1

Derivatives are securities that derive their price from some other thing, e.g. a stock or an index. Options are derivitives since they derive their price from the underlying stock's value. Calls and puts are derivitives as are futures. CMOs and other mortgage backed securities are also derivatives.

Answer 2

Derivatives are financial instruments (things people can trade with by buying and selling in an exchange) that are based on some stocks or index. It is like saying that basket ball jerseys are derivatives of NBA.

There are 2 main types of derivatives : 1. Options. 2. Futures.

Options are contracts that allow you to buy or sell specific number of shares at a specific pre-determined price. It is a highly versatile financial instrument that makes it easy for any investors to profit whether the stock goes up, or down or even sideways.
To learn exactly what options are and how to trade options, please visit http://www.optiontradingpedia.com/ where you get to learn for free.

Futures are contracts that allow you to book the delivery of a specific amount of stocks at a specific future date at a pre-determined price. The main advantage is its leverage but it is a lot less versatile compared with options as it is more difficult or complex to profit with futures on the short side and almost impossible to profit when the stock stays sideways.

That is why option trading is fast becoming a very hot method amongst many small and medium investors.

Hope these helps.


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Answer 3

It is an Option or Future.....

Answer 4

that one thing