Derivatives Trading
Derivatives trading involves buying and selling contracts like futures, options, swaps, and forwards. These contracts derive their value from underlying assets such as stocks, commodities, currencies, or interest rates. The buyer of a derivative can either take delivery of the asset at contract maturity or offset it by entering into an opposite contract. Derivatives can be traded on exchanges or over-the-counter (OTC) markets. These instruments allow traders to hedge risk, speculate on price movements, or gain exposure to various assets without directly owning them.
Related Terms
Delivery Trading
Delivery trading involves buying/selling a security and settling it by taking/giving delivery. Unlike intraday trading,...
Bracket Order
A bracket order is an intraday trading tool that combines three legs of orders to...
Beta Coefficient
The Beta coefficient measures a stock’s volatility relative to the market, aiding investors in assessing...
Foreign Direct Investment
Foreign Direct Investment (FDI) refers to the act of acquiring a majority stake in a...
Income Statement
An income statement is a key financial document detailing a company’s profit, loss, revenue, expenses,...
Return on Capital Employed (ROCE)
Return on Capital Employed (ROCE) is a financial ratio used to assess a company's profitability...
