What Is an Equity Derivative?

Derivative products are a financial instrument, generally represented as an agreement between two entities, whose price is determined by the prices of other basic products. And there is a corresponding spot asset as the subject matter, which does not need to be delivered immediately when the transaction is completed, but can be delivered at a future point in time. Typical derivatives include forwards, futures, options and swaps.

Derivatives

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Means that its value depends on the foundation

As for the types of financial derivative products, there are very many internationally, and because of the continuous introduction of new varieties of financial innovation activities, more and more things fall into this category. From the basic classification, there are three main categories:

(1) According to the product form, it can be divided into four categories: forward, futures, options and swaps.

(2) Classification based on primary assets, that is, stocks, interest rates, exchange rates, and commodities. If it is further subdivided, the stock class includes specific stocks (stock futures, stock option contracts) and stock index futures and option contracts formed from stock portfolios; the interest rate class can be divided into short-term deposit interest rates as a representative Short-term interest rates (such as interest rate futures, interest rate forwards, interest rate options, and interest rate swap contracts) and long-term interest rates represented by long-term bond rates (such as bond futures, bond option contracts); currencies include a variety of currencies The commodity category includes all kinds of bulk physical goods.

(3) According to the trading method, it can be divided into on-site trading and off-site trading. On-the-spot trading is usually referred to as exchange trading, which means that all suppliers and demanders concentrate on the exchange to conduct auction transactions. Over-the-counter trading is over-the-counter trading, which refers to the transaction method in which the two parties to the transaction directly become counterparties to the transaction, and its participants are limited to customers with high creditworthiness.