Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
What is a Derivative Security?
A Derivative Security is a financial instrument whose value depends on the underlying asset.
Examples of Derivative Securities are:
Examples of Underlying Assets are:
- Financial Securities
- Stock indices
- Metals (copper, gold, silver)
- Agricultural (corn, cotton, orange juice, coffee, cattle)
- Oil products, natural gas
A Futures Contract is an agreement between a buyer (long position) and a seller (short position), to buy or sell the underlying asset at a certain time in the future (which is the maturity date), with a predetermined price.… Read more