What are derivatives?

Tim Bennett explains what derivatives are, and how you can use them to your advantage.

Tim Bennett explains what derivatives are, and how you can use them to your advantage.

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What are futures?

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Derivative

As such, they can be used either to gamble or to reduce the risk of ('hedge') an investment in the underlying security. Examples of derivatives are futures, options and swaps. For instance, an option is a derivative because its value changes in relation to the performance of an underlying stock.

Entry from MoneyWeek's Financial glossary.

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