Many people who come to the financial market, do not know or have never even heard of derivatives. And no wonder. The market of derivatives (options, futures, swaps), at first glance, much more complicated than the market of the underlying assets (the stock market, stocks, bonds). But the fact that the derivatives market is so tightly joined to the structure of modern financial market that any novice trader you need to know about derivatives. The purpose of this article to tell you in plain language that, that such derivatives.
That's what tells us the definition:
A derivative or derivative financial instrument Is a contract (contract) of several parties, under which they undertake to perform certain actions (which are stipulated by the contract), with respect to the underlying asset. As a result, at the same time, a financial asset arises from one company and a financial liability or equity instrument - from the other. Thus, the derivative is obligations that the parties will have to perform under the contract and are based on the future value of the underlying asset. Derivatives in their essence are always focused on making a profit, not buying an asset. The purpose of acquiring derivatives in the financial market is not the physical receipt of the asset, but the profit from the change in the market price of the asset.
The most popular derivatives are options, futures, swaps.
Option It entitles the buyer to receive remuneration in accordance with pre-agreed conditions. To start trading binary options, enough to register and open a trading account with a broker. See my a rating of binary options brokers .
futures - An agreement to buy / sell the underlying asset at the price agreed in the contract. Futures are traded only on exchanges, but she purchase / sale occurs at some point in the future.
More difficult, SWAP - Commercial and financial exchange transaction. Exchange are subject to a variety of assets. and issued kontrsdelka At the conclusion of the transaction for the sale or purchase of an asset. The essence of kontrsdelki to reverse the sale or purchase of the same goods on the same or different conditions, but after a certain period of time. It is generally assumed Multiperiod exchange. What is the use of SWAP:
- Increasing the amount of assets
- Financing against securities
- Loan securities to certain obligations
- Reduction of risks
- Receiving a profit.
Understand derivative work principle can The following example:
For example, your company «ABC» grows wheat. Conventionally, in April Dy begin to sow the field. At the time of sowing, the price for 1 kg of wheat, for example, will 50 rubles. You as a manufacturer like this price. You cover all of your costs and have a small profit. And here you are thinking, and whether the crop year? And indeed, around the financial crisis, and you do not know what will happen to the price of wheat in August, when you collect all of your harvest from the fields. The price could rise up to 60 rubles per kilogram, and you can make good money, and perhaps drop down to 40 rubles per kilogram.
A little thought, you decide that you do not need to 60 rubles, which is not necessarily you will have, and want to get your 50 rubles, which cover all the costs and provide a small profit. Just do not get 40 rubles per kilogram, which zavedut your business at a loss.
And then you start looking in April someone who is ready to buy your wheat in September. Any company «BBC», which produces high-quality wheat flour. The company «BBC» as you do not know what will happen in September. If the price is 40 rubles per kilogram of wheat, they will be able to buy more wheat, recycle it and earn more if the price is 60 rubles per kilogram of wheat, then they will buy less and less wheat flour will be sold. If the price is 50 rubles, is fully satisfied with "BBC" flour producer.
You have found each other, and your interests are the same. Company «ABC» agreed in September to sell their wheat at 50 rubles per kilogram, while the company «BBC» agree to buy your wheat at 50 rubles per kilogram. Both sides are well aware that someone could be in the September contract on the wheat in the best conditions for themselves, just as someone might enter into a contract and the worst conditions. Thus, in April, you enter into a contract, and both parties insure themselves against the risks of September. Wheat and money for the goods will be exchanged in September.