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
Earnings Per Share
Earnings Per Share (EPS) measures a company’s profit for each outstanding share, calculated as EPS...
Forex Options
Forex options, also called currency options, are exchange-traded derivatives granting the right, but not the...
Liquidity Trap
A Liquidity Trap is an economic scenario where individuals and businesses prefer to hold onto...
Free Float Market Capitalization
Free-float market capitalization (FFM) is a valuation method that calculates a company's market value using...
52 Week High
A 52-week high is the peak price of a stock or ETF over the past...
Liquidity
Liquidity refers to how easily an asset can be bought or sold in the market...
