Derivative instrument

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Revision as of 14:45, 25 July 2013 by imported>Modonovan (Link to Treasurer article)
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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).

For 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


External links

"Masterclass: Derivatives" The Treasurer magazine: www.treasurers.org