Flow Derivative

AAA

DEFINITION of 'Flow Derivative'

A securitized product that aims to provide maximum leverage. Some popular flow derivatives include vanilla options, leveraged synthetic spot positions (WAVE XXLs) and synthetic structured forwards (such as bonus certificates). Flow derivatives are traded on exchanges or other electronic platforms.

INVESTOPEDIA EXPLAINS 'Flow Derivative'

Flow derivatives are traded on electronic platforms, hence the availability of real time prices and the ability to place trades automatically. Flow derivatives typically allow investors to take on a directional position on exchange rate movements.

RELATED TERMS
  1. Barrier Option

    A type of option whose payoff depends on whether or not the underlying ...
  2. Exchange

    A marketplace in which securities, commodities, derivatives and ...
  3. Property Derivative

    A type of financial product that fluctuates in value depending ...
  4. Derivative

    A security whose price is dependent upon or derived from one ...
  5. Vanilla Option

    A financial instrument that gives the holder the right, but not ...
  6. Forex - FX

    The market in which currencies are traded. The forex market is ...
Related Articles
  1. Investing Basics

    The Barnyard Basics Of Derivatives

    This tale of a fictional chicken farm is a great way to learn how derivatives work in the market.
  2. Options & Futures

    Are Derivatives A Disaster Waiting To Happen?

    They've contributed to some major market scandals, but these instruments aren't all bad.
  3. Options & Futures

    Are Derivatives Safe For Retail Investors?

    These vehicles have gotten a bad rap in the press. Find out whether they deserve it.
  4. Options & Futures

    What Investment Is Best For You?

    ETFs, mutual funds, hedge funds and advisory firms are just some of the choices to consider.
  5. Options & Futures

    Hedge Funds Hunt For Upside, Regardless Of The Market

    Hedge funds seek positive absolute returns, and engage in aggressive strategies to make this happen.
  6. Options & Futures

    Understanding Option Pricing

    Take advantage of stock movements by getting to know these derivatives.
  7. Investing

    Is It Possible To Trade Bitcoin Options?

    Options trading in bitcoins is a good way to insure or hedge one's risks or earn profits from volatility and speculation, but there still are risks.
  8. Options & Futures

    Options and Roth IRAs: Do's and Don'ts

    A breakdown of the do's and don'ts of trading options in a Roth IRA.
  9. Options & Futures

    5 Secrets You Didn't Know About Roth IRAs

    Between its generous tax benefits at retirement and no required minimum distributions, a Roth IRA is well worth considering if you're eligible to have one.
  10. Forex Strategies

    The 10 Riskiest Investments

    Investors seeking high returns must also be prepared for high risk. Here are ten of the riskiest investments available.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center