Derivative instrument: Difference between revisions
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imported>Doug Williamson (Link with Hedging page.) |
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A derivative instrument or contract is one whose value and other characteristics are derived from those of another asset or instrument (sometimes known as the Underlying Asset). | A derivative instrument or contract is one whose value and other characteristics are derived from those of another asset or instrument (sometimes known as the Underlying Asset). | ||
Derivative instruments are widely used by non-financial corporates for hedging purposes. | |||
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* [[ETD]] | * [[ETD]] | ||
* [[Fixing instrument]] | * [[Fixing instrument]] | ||
* [[Hedging]] | |||
* [[Maturity]] | * [[Maturity]] | ||
* [[Notional principal]] | * [[Notional principal]] | ||
Revision as of 09:10, 9 February 2016
A derivative instrument or contract is one whose value and other characteristics are derived from those of another asset or instrument (sometimes known as the Underlying Asset).
Derivative instruments are widely used by non-financial corporates for hedging purposes.
Example
A share option is a type of derivative contract, allowing the holder to buy shares at a certain predetermined strike price.
The value of the share option derives from the current price of the related underlying share relative to the option strike price.
See also
- CertFMM
- Commodity risk
- Embedded derivative
- ETD
- Fixing instrument
- Hedging
- Maturity
- Notional principal
- Option
- Outright
- Strike price
- Tracker fund
- Underlying
- Underlying asset
- Underlying price
