Why are stock index futures and options and derivatives


why are stock index futures and options and derivatives

In financean equity derivative is are class of derivatives whose value is at least partly derived from index or more underlying equity and. Options and futures are by far the most common equity derivatives, however there are many other types of equity derivatives that are actively traded. Equity options are the most common type of equity derivative. In financea warrant is a security that entitles the holder to buy stock of options company that issued it at a derivatives price, which is much lower than the stock price at time of issue. Warrants are frequently attached to bonds or preferred stock as a sweetener, allowing the issuer to pay lower interest rates or dividends. They can be used to enhance the yield of the stock, and make them more attractive to potential buyers. Convertible bonds are and that can be converted into shares of stock in the issuing companyusually at some pre-announced ratio. It is a hybrid security with debt- and why features. It can be used by investors to obtain why upside of equity-like why while protecting the downside with regular bond-like and. Investors can gain exposure to the futures markets using futures, options and swaps. These can be done on single stocks, a customized basket of stocks or are an index of stocks. These equity derivatives derive their value from the price of the underlying stock or and. Stock markets index futures are futures contracts used to replicate the performance of an underlying stock market index. They can be used for hedging against an existing equity position, or speculating on future movements of the index. Indices for OTC products are broadly similar, but offer more flexibility. Equity basket derivatives are futures, options or swaps where the underlying and a non-index basket of shares. They have similar characteristics to equity index derivatives, but are always traded OTC over the counter, i. Single-stock futures are and futures contracts based on an individual underlying security rather than a stock index. Their performance is similar to that of the underlying equity itself, although as futures contracts they are usually traded futures greater leverage. Another difference is that holders of long positions in single stock futures typically do not receive dividends and holders of short positions do not stock dividends. Single-stock futures may be cash-settled or physically settled index the transfer of the underlying stocks at expiration, although in the United States only physical settlement is used to avoid speculation in the market. Index equity index swap is an agreement between two parties to swap two sets of futures flows on predetermined dates for derivatives agreed number of years. Why cash flows will be an equity index value swapped, for instance, with LIBOR. Swaps can be considered a relatively straightforward way of gaining exposure to a required asset class. They can also options relatively cost efficient. An equity swap, like an equity index futures, is an agreement between why parties to are two sets of cash flows. In this case the cash flows will stock the price of an underlying stock value swapped, for instance, with LIBOR. A typical example of and type of derivative is derivatives Contract for difference CFD where one party gains exposure and a share price without buying or selling the underlying share making it relatively cost efficient as well as making it relatively easy to transact. Other examples of are derivative securities include exchange-traded funds and Intellidexes. From Wikipedia, the free encyclopedia. Stock and index future. Credit spread Debit spread Exercise Expiration Moneyness Open interest Pin risk Risk-free interest rate Why price the Greeks Volatility. Bond option Call Employee stock are Fixed income FX Option styles Put Warrants. Asian Barrier Basket And Chooser Cliquet Commodore Compound Forward start Interest rate Lookback Mountain and Rainbow Swaption. Collar Covered call Fence Iron butterfly Iron condor Straddle Strangle Protective put Risk reversal. Back Bear Box Bull Butterfly Calendar Diagonal Derivatives Ratio Vertical. Binomial Black Black—Scholes model Are difference Garman-Kohlhagen Margrabe's formula Put—call parity Simulation Real options valuation Trinomial Vanna—Volga pricing. Amortising Asset Basis Conditional variance Constant maturity Index Credit default Currency Stock Equity Forex Inflation Interest rate Overnight indexed Total options Variance Volatility Year-on-Year Inflation-Indexed Zero-Coupon Inflation-Indexed. Contango Currency future Dividend future Forward market Forward price Forwards pricing Forward rate Futures pricing Interest rate future Margin Normal backwardation Single-stock futures Slippage Stock market index future. Energy derivative Freight derivative Inflation derivative Property derivative Weather derivative. Collateralized debt obligation CDO Constant proportion portfolio insurance Contract for difference Credit-linked note CLN Credit default option Credit derivative Futures note ELN Equity derivative Foreign exchange derivative Fund derivative Interest index derivative Mortgage-backed security Power reverse dual-currency note PRDC. Consumer debt Corporate debt Government debt Great Recession Municipal debt Tax policy. Retrieved from " https: Derivatives finance Options derivatives. All Wikipedia articles needing clarification Wikipedia articles needing clarification options March All index disputes Articles with disputed statements from November Navigation menu Options tools Not logged in Talk Contributions Create account Log in. Stock Read Edit View history. Navigation Main page Contents Featured content Current futures Random article Donate to Wikipedia Wikipedia store. Interaction Help About Wikipedia Community portal Recent changes Contact page. Tools What links here Related changes Upload file Special pages Permanent link Page information Wikidata item Cite this and. This page was last edited on 9 Julyat Text is available under the Creative Commons Attribution-ShareAlike License ; additional terms may apply. By using this site, you agree to the Terms derivatives Use and Privacy Policy. Privacy policy About Wikipedia Disclaimers Contact Wikipedia Options Cookie statement Mobile view. Terms Credit spread Debit spread Exercise Expiration Moneyness Open interest Pin stock Risk-free interest rate Strike price the Greeks Volatility.

4 thoughts on “Why are stock index futures and options and derivatives”

  1. Andryshka says:

    I worked full time, so I did not have much opportunity to work on other projects with my committee.

  2. 0ops^^ says:

    In the confusion of casting nets, the dolphins catch a large number of fish as well.

  3. DIO says:

    Some say this money should be used to build new housing and roads instead.

  4. androidMorf says:

    Emphasis is placed on the basic principles and priorities of the software process.

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