What You Need To Know When Trading Derivatives And Futures
Hello Fellow-Investor.
The Derivatives and Futures Market is the most potentially profitable market in the world. But it can be the most distructive one too!
Derivatives
A derivative is a financial term for a specific type of investment from which the price over a certain time is derived from the performance of the underlying asset such as commodities, shares or bonds, interest rates, exchange rates or indices like stock market index or consumer price index.
This performance can determine both the amount and the timing of the payoffs. The diverse range of potential underlying assets and payoff alternatives leads to a huge range of derivatives contracts available to be traded in the market. The main types of derivatives are Futures, Forwards, Options and Swaps.
Futures
A futures contract is a standardized contract, traded on a futures exchange
to buy or sell a certain underlying asset. at a certain date in the future, at a pre-set price.
The future date is called the delivery date or final settlement date. The pre-set price is called the futures price. The...
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