What are derivatives?

Derivatives are a type of instrument which can be used by traders to speculate or hedge positions. In this article, we discuss what a derivative is and some of the common examples of this instrument. Definition of a Derivative Derivatives are instruments where their value is derived from an underlying security. This means the price of the derivatives is dependent on how the underlying asset (being stock, bond, commodities, interest rate) is performing. Types of Derivatives Options There are two …

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