Futures and options: the derivatives markets
“A derivative is like a razor. You can use it to shave yourself and make yourself attractive for your girlfriend. You can slit her throat with it. Or you can use it to commit suicide.”
“Read Ben Graham and Phil Fisher, read annual reports, but don’t do equations with Greek letters in them.”
- A derivative is an asset the performance of which is based on – derived from – the price of an underlying asset. Underlying assets may be shares, bonds, currencies, interest rates or commodities, but in each case the assets themselves do not need to be bought or sold.
- An option contract offers the right to buy or sell an asset at a future date for a given price. A futures contract ...