What are derivative assets?

Derivative assets are those assets whose value is derived from some other assets. Futures & options are two main categories of best known derivative assets. Other derivative assets include swaptions, swaps and inverse floaters, each of these have different risk features.

What are derivatives & how do they work?

What Are Derivatives? Derivatives are complex financial contracts based on the value of an underlying asset, group of assets or benchmark. These underlying assets can include stocks, bonds, commodities, currencies, interest rates, market indexes or even cryptocurrencies.

Are derivatives a form of advanced investing?

Typically, derivatives are considered a form of advanced investing. The most common underlying assets for derivatives are stocks, bonds, commodities, currencies, interest rates, and market indexes. Contract values depend on changes in the prices of the underlying asset.

Which asset class is used in exchange-traded derivatives?

Stock or equity derivatives: Common stock is the most commonly traded asset class used in exchange-traded derivatives. As exchange-traded derivatives tend to be standardized, not only does that improve the liquidity of the contract, but also means that there are many different expiries and strike prices to choose from.