Personal Finance & Money Stack Exchange
Personal Finance & Money Stack Exchange

Questions tagged [derivatives]

This tag is to be used for any question on derivatives. It should typically be used in conjuction with the actual instrument being used like futures, options, swaps, etc.

156 questions
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How do I bet that a stock price will not move?

If I believe a stock will go up, I buy the stock. If I believe a stock will go down, I short the stock. If I believe a stock will neither go up nor down, what do I do? How do I profit from a non-movement in stock price? I think I might be able to…
user102086
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What happens if I do not honor a futures contract?

I have little knowledge about futures contracts. The recent negative price of crude oil spurred my curiosity about this stuff. I read this post about buying/selling futures contracts. According to this post, when I buy a futures contract, I enter…
William
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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 Apple stock for just $50 is using something…
wondering
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Is there a catch on this structured derivative product?

I have a friend who is looking at purchasing this derivative product from JPMorgan. It looks more or less like it's pretty difficult to lose ( ie. not do better than investing in a plain s&p index fund), but I'm always very skeptical of these types…
David
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Why trade futures if you have options?

This article explains the difference between futures and options. It seems a futures contract is an obligation, while an option is a right (not an obligation). If this is true, why would anybody ever deal with futures? An obligation is always less…
Victor123
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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 care if the stock goes up or down. I want to make…
John Shedletsky
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Deep in the money put options

I'm trying to make sense of this option: Type: put Expiry: 2021-02-05 (= this week's Friday) Bid: 580.4 Ask: 584.9 Contract size: 100 Strike: 800 The underlying's last price is $225. Buying this put for $584.9 will give me the right to sell 100…
thwd
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What exactly is a "derivative"?

I haven't been able to find exactly what a derivative means. It seems to be some sort of cross of insurance, stock, and lay-a-way. When I try to look it up, all I find is all the problems not regulating it has caused. My question is: What is the…
Christopher King
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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 the spot price, regardless on whether the purchasers…
djcredo
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Do physical ETFs possess the same problems as CDOs?

Today Michael Burry explained to Bloomberg that ETFs are comparible to subprime CDOs, in that investors are buying securities that aren't backed by any real value: Passive investing has removed price discovery from the equity markets... ... this is…
Lawrence Wagerfield
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What are futures and how are they different from options?

As a form of investment there are contracts to buy commodities at a specific time in the future or at a specific price. How is this different from an option to buy a share?
Zephyr
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How are futures contracts setup at an exchange?

I'm having a hard time wrapping my head around how the actual contracts are structured at an exchange. Here are my questions: If an exchange facilitates the trading of futures contracts and nobody intends to take delivery of the product, nor do…
Kiril
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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 where you buy both a call and put option on a stock…
JohnFx
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How can I gamble in a "lottery" by using financial instruments?

I noticed that some financial instruments have lottery-like payoffs. If that is really the case, I am planning to play the "lottery" using financial instruments instead of the lotteries organized by the gambling industry. Reasons for doing…
user102086
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Reasons for a warrant's intrinsic value and price not adding up?

I'm looking at a specific (American-style) warrant of a company and let's say I see something like the following: Warrant Bid/Ask: 0.30$/0.35$ Strike Price: 15$ Current stock price: 16$ Expiration date: 21st of December of 2018 How is this…
foobar
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