Derivatives - Introduction

The "sexiest" subject on the Series 7 exam has to be derivative products, or options, and not just because it has the most evocative terminology in the financial lexicon (read on and see for yourself). It is a complex topic that requires you to have confidence in your mathematical and conceptual skills in order to master the calculations and strategies involved.

Derivative products are also a way to potentially make a great deal of money with little risk - or lose it all when assuming higher risk strategies.
What Are Options?


Related Articles
  1. Professionals

    What is a Derivative?

    CFA Level 1 - What is a Derivative?. Learn the basicas of derivative instruments. Covers various types of options, swaps and differentiates exchange and over-the-counter trades.
  2. Professionals

    Series 7 Exam Prep: Options

    One of the most challenging topics in the series 7 exam is options. Find out what you need to know before you take the test.
  3. Professionals

    Criticisms of Derivatives

    CFA Level 1 - Criticisms of Derivatives. Discusses types of criticisms facing derivatives. Offers contrasting opinions on the use of derivatives and their role in the market place.
  4. Investing

    What Is A Derivative?

    A derivative is a security whose price is dependent upon or derived from one or more underlying assets. Learn more on how investors can use this financial instrument in their trading strategies.
  5. Professionals

    Derivatives

    FINRA Series 7 Exam Study Guide - Section 8
  6. Professionals

    Introduction

    Listed options trade on exchanges in a manner that is similar to the trading in listed stocks. The exchanges maintain orderly markets for listed options and provide investors with a marketplace ...
  7. Professionals

    Introduction

    NASAA Series 65: Section 10 Alternative Investments. This section introduces the chapter on alternative investments.
  8. Professionals

    Introduction

    Series 62 - Section 1 - Equity Securities - Introduction
  9. Professionals

    Introduction

    CFA Level 1 - Derivatives. An introduction to the exotic financial instruments known as derivatives. Learn what derivative knowledge will be required for the CFA exam.
  10. Professionals

    Introduction To The Series 65 Exam

    The Series 65 is required in many states in order to be a fee-based advisor. Find out what it is and whether you need it.
RELATED TERMS
  1. Derivative Product Company - DPC

    A special-purpose entity created to be a counter-party to financial ...
  2. Exchange Traded Derivative

    A financial instrument whose value is based on the value of another ...
  3. Underlying Option Security

    An underlying option security is the financial instrument on ...
  4. Series 42

    An exam offered by the Financial Industry Regulatory Authority ...
  5. Underlying Security

    The security on which a derivative derives its value. For example, ...
  6. Underlying Asset

    A term used in derivatives trading, such as with options. A derivative ...
RELATED FAQS
  1. How big is the derivatives market?

    Examine the potential size of the total derivatives market, and learn how different calculations can reduce the estimate ... Read Answer >>
  2. I have passed the Series 63 and FINRA Series 7, but would like to become licensed ...

    Becoming an investment adviser representative requires more examination than just taking the FINRA Series 63 exam. See what ... Read Answer >>
  3. Can mutual funds invest in derivatives?

    Find out about mutual fund investment options, and understand whether mutual funds are permitted to include investments in ... Read Answer >>
  4. What does it mean to be long or short a derivative?

    Find out more about derivative securities and what it indicates when traders or investors establish a long or short position ... Read Answer >>
  5. What are the main risks associated with trading derivatives?

    Understand derivatives trading and learn about the primary risks usually associated with trading in the derivatives market, ... Read Answer >>
  6. What expiry months are typically available for derivatives?

    Discover more about the derivatives market and learn about the varying expiration months for derivatives in different financial ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center