Stock Markets Exposed

what are the derivatives, i heard in stock market news?

derivaatives are a financial insturment. i think it is like at goverment security bond papers.

Public Comments

1. Derivative is the shadow of the stock traded in the stock -cash-market.It has no separate existence and physical properties for delivery. It is called future, meaning the approximate price in a future date - next month, month succeeding the next month, current month(end). When a stock rise in the cash market its derivative may be traded at a premium PLUS or discount MINUS for the precised future date depending on the expectation-speculation of the traders.
2. It is not a stock but the right to purchase or sell the stock at a given price until a certain date. Depending on which ones are bought or sold, they can either greatly increase leverage and risk, or decrease leverage and risk.
3. derivateives are a synthetic version of an asset class. eg a government bond is issued as a straight investment. a derivative of that might be a futures contract based on it, an option, call, put or other. given few of us have the cash to buy $10million worth of govt bonds, a cheaper way is thru leverage- which is what a derivative provides.