Derivatives are a specific form of securities that are (such as their name implies) derived from a base instrument which can be stocks, bonds, various indexes, currency exchange rates, stock goods, etc. Derivatives are therefore securities which represent abstracted piece of the value of a property from which they derived a period of time. In fact, derivatives are a kind of standardized, market-regulated contract in which two sides of the predetermine the subject, price and timing of the sale and that they are standardized and regulated in the specific markets enabled the trade as well as other securities. The main purpose of derivatives is the provision of market risks (all kinds), but are also one of the most speculative types of securities traded in the market.
There are several types of derivatives and the most basic are:
- forward contracts (futures, forwards, swaps)
- option contracts (options)
Because of all these types of derivative options by far the best known and most widely used as a form of investment or speculation, we will devote most attention to them. The very word "options" derives from the Latin word "optio" meaning the dial. In the financial context for options can be translated as a choice, the act of dialing.
The very word "options" derives from the Latin word "optio" meaning the dial. In the financial context for options can be translated as a choice. Options are financial instruments that entitle customers to buy or sell a certain good (eg shares and to a certain number of shares for a specified price), or the exact date. What is most interesting for the options is that they provide the buyer the right but not the obligation to exercise this right. Buyer to do their "real" wages so. option premium, which actually represents the price of the options like paper. On the other hand, the "writer" option from the customer is charged a premium option, regardless of whether the buyer (or decision) is consumed to his right. Each option has its own life, and after that date the option becomes worthless. Most of the options just as well finish since the holder does not provide convenient shopping good, which is subject to the options expiration date. Yet, as a means to achieve fine speculative profits are options in the last 10-odd years has become one of the biggest challenges many people around the world!
