How to make a Derivative?

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Nabooru

11y

Cut a hole in the box
Put your junk in that box
Make her open that box

And that's the way you do it

Authored by: Certified Asset Management Professional - 3rd+ Year AnalystCertified Asset Management Pro

Frieds

11y

I'd say to check out this great piece by the Milken Institute for some guidance. I'd also check this out too. Essentially, all you need is to figure out what you're underlying security is and what kind of a contract are you betting on in relation to the underlying security. The easiest example is an equity option. An equity option is a derivative that gets its value in relation to the odds of a security reaching a certain price by a certain date in order to get executed. Most derivatives work that way (it's an extremely oversimplified explanation but it's the basic approach).

tdr34

11y

Even easier, forwards/futures. A derivative can be anything basically, this is way too vague.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock

Macro Arbitrage

11y

WSB, I wouldn't have expected you to ask such a naive question.

Authored by: Certified Research Professional - 2nd Year AnalystCertified Research Pro

wallstreetballa

11y

Macro Arbitrage:
WSB, I wouldn't have expected you to ask such a naive question.

I probably should of given .2 seconds of thought before I sprayed on my keyboard

Let me rephrase that....

How do you actually get your Derivative out in the market?

Authored by: Certified Asset Management Professional - Research AnalystCertified Asset Management Pro

Boothorbust

11y

Best Response

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