Derivatives (and Jargon-busting)

There are many different kinds of derivatives. We can only give you a general introduction here. We also include a jargonbuster to explain all those strange terms.

Contents

1. What is a Derivative? 
2. CFDs 
3. Options and Futures
4. Interest rate swaps

The key to investing in your financial future rests only with your ability to learn

There are many different kinds of derivatives. We can only give you a general introduction here.

Let’s look first at the definition of a derivative:

A derivative is a financial instrument that "derives" its value from the intrinsic value and/or change in value of an underlying asset.

Examples of derivative trading instruments are - CFDs, call options, put options, interest rate swaps, futures contracts, etc.

In general, derivatives are used by sophisticated investors to maximize cash returns and/or minimise negative exposure to uncertain price movements in the underlying asset.

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