This tag is to be used for any question on deravites. It should typically be used in conjuction with the actual instrument being used like Options, Swaps, Futures
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42 views
How is the price of VXX determined?
I'm trying to understand how VXX works (the prospectus on Barclay's Ipath). It says that it has a rolling position in futures (1 month and 2 month). Does that mean that it buys and sells contracts ...
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0answers
56 views
Who is the issuer in a derivative contract?
In the case of a bond or a share, there is a bondholder or a shareholder on one side and a company issuing the security on the other side. In a derivative contract, which party can be named as the ...
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1answer
86 views
How are derivatives treated in bankruptcy?
If I am a counterparty to a contract (swap, cds etc.) with an entity that went bankrupt and I am due some payment, how "senior" is my claim (amongst the other creditors where do I rank)?
I'm sorry if ...
8
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4answers
754 views
Buying a small amount (e.g. $50) of stock via eToro “Social Trading Network” using a “CFD”?
On LinkedIn I saw an ad claiming I could buy some AAPL stock for as little as $50. I clicked and came to a site called eToro that calls themselves a "Social Trading Network". It appears the buying of ...
4
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3answers
184 views
Margin when entered into a derivative contract
From Wikipedia
In finance, a margin is collateral that the holder of a financial
instrument has to deposit to cover some or all of the credit risk of
their counterparty (most often their ...
3
votes
3answers
188 views
What is the best way to make a bet that a certain stock will go up in the medium term?
If I want to make a $1000 bet that, say, a share of AAPL will be $1000 in a year's time, what's the best way to do that?
AAPL is over $600 today, so with my $1000 I can only afford to buy one share. ...
2
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2answers
1k views
Difference between Black-Scholes, Binomial models and Market price in European index options?
Need some help!
I have calculated the theoretical price of an index option using BS and Binomial models and are now comparing the three. While BS and Binomial have approximately the same value, ...
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4answers
199 views
Is it illegal to buy derivatives on your own assets?
Is it illegal to buy derivatives on your own assets? Such as student loans you owe, or your own mortgage?
4
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1answer
77 views
What is credit default swap rate?
I understand that for a credit default swap (CDS), its CDS spread is the rate of payments that the buyer of the CDS makes to the seller in each year.
I also heard of "CDS rate". I wonder how it is ...
2
votes
4answers
399 views
“Derivative” and “asset-backed security”: Same concept, or related?
Derivative and asset-backed security seem to be similar, as both are based on some other assets. So I wonder if they are the same concept?
4
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2answers
129 views
How far into the future is a stock future? How do stock futures work?
I have been looking at the markets recently and most of the time, I see similar articles on how the market is going to do depending on how futures did. I am not that familiar with futures, but how ...
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vote
2answers
30 views
Meanings of “price of the derivative”
From Wikipedia:
a short position in a futures contract or similar
derivative means that the holder of the position will profit if
the
price of the futures contract or derivative goes ...
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vote
4answers
200 views
What is the meaning of “writing put options”?
From Wikipedia:
A long position in a security, such as a stock or a bond, or equivalently to be long in a security, means the holder of the position owns the security and will profit if the price ...
1
vote
2answers
36 views
Are a derivative and its underlying asset traded with the same party?
Suppose I buy a derivative (option, future, swap, ...) now from some party. As specified by the derivative, sometime in the future, I will buy or sell the underlying asset of the derivative. I wonder ...
4
votes
1answer
150 views
Advice for a beginner investor interested in trading stocks and derivatives online?
I wanted to start an E-Trade account more or less just to fool around with. The goal is always to make money obviously, but at first I just kind of want to experiment and get familiar with the ...
3
votes
2answers
263 views
What is a negotiable security and how are they related to derivatives?
From Wikipedia, security is defined as:
A security is generally a fungible,
negotiable financial instrument
representing financial value.1
Securities are broadly categorized
into:
* debt ...
3
votes
1answer
146 views
Are leverage/ko products the only reasonable way to trade stocks?
As a small investor, there is a number of advantages to buying leverage derivatives instead of the actual stock:
fixed stop-loss
Once the KO barrier is hit, your money is gone - and you do not ...
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votes
1answer
153 views
Can the bid price for selling the same call option in calendar spread be different from that in covered call?
I am trying to sell C (citi) call options expiring 2013 Jan at $5.00 in 2 different modes.
Calendar spread mode: Bid Price is $0.24
Covered call mode: Bid Price is $1.01
1)Why is there a difference ...
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5answers
323 views
Is there a Way to Bet on the Trade Volume of a Stock?
Say stock ABC trades 100,000 shares per day. I feel strongly that in the near future it will trade 200,000 shares per day.
Is there an instrument I can buy to profit on this?
To be clear, I don't ...
6
votes
3answers
121 views
Does a high demand for long commodities Futures push up the underlying spot price?
Let's take a commodity as an example - oil. Suppose there is suddenly a high demand for a 30-day oil futures contract. Will that push up the spot price on oil?
I would guess that this would affect ...
5
votes
3answers
202 views
Fund or ETF that simulates the investment goals of an options “straddle” strategy?
With all the market volatility of late, I was thinking that it might be a good short term strategy to employ a straddle approach.
For those not familiar with Options trading: This is a strategy ...
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2answers
94 views
What is the options industry changing about option symbols in February, 2010?
I've heard that the options industry and options exchanges are making changes to options symbols effective February, 2010.
What are the specific changes to stock option symbols? Why are the changes ...
