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Derivatives
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== <span style="color: #FFFFFF;">Remembering</span> == * '''Derivative''' β A financial instrument whose value is based on one or more underlying assets. * '''Underlying Asset''' β The real-world object (stock, commodity, etc.) that the derivative is based on. * '''Option''' β A contract that gives the buyer the ''right'' (but not the obligation) to buy or sell an asset at a set price. * '''Call Option''' β A bet that the price will go '''Up'''. * '''Put Option''' β A bet that the price will go '''Down'''. * '''Future''' β A contract that ''obligates'' both sides to trade an asset at a set price on a set date in the future. * '''Swap''' β A contract to "swap" cash flows (e.g., swapping a variable interest rate for a fixed one). * '''Strike Price''' β The price at which an option holder can buy or sell the underlying asset. * '''Expiration Date''' β The date when the derivative contract ends. * '''Premium''' β The fee paid to buy an option. * '''Hedging''' β Using derivatives to offset potential losses in another investment. * '''Speculation''' β Taking on risk in the hope of making a quick profit from price movements. * '''Leverage''' β Using a small amount of money to control a large amount of an asset (making both gains and losses much bigger). </div> <div style="background-color: #006400; color: #FFFFFF; padding: 20px; border-radius: 8px; margin-bottom: 15px;">
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