Fed Financial
financial HELP!?
what are derivatives? financialy, im learning about the stock market and i need a quick explanation of it.
Public Comments
- check out www.investopedia.com for this and any other questions you have about the market. There are several sites out there; this is the one I refer to.
- A financial derivative is simply a financial instrument that derives its value from some other underlying financial instrument. A basic example is an option such as a call or a put which derives it's value based on the movement of the underlying stock. Derivatives can be a usefull tool in portfolio management and some believe they are inherently risky which is not the case assuming the investor fully understands the workings of the derivative and applies the use of them in the proper way....often times derivatives are used to lower the overall risk exposure in a long only portfolio. Keep educating yourself...many other posters gave you good links and before including derivatives into your portfolio make sure you fully understand them and spend some time working with them in a practice portfolio.
- Derivative is financial instrument that derives its value from some other underlying financial instrument. It can be used to hedge your stocks from falling. Acts like an insurance.
