Equity Derivatives

A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. There are several different types of equity derivative; including options, warrants, futures, forwards, convertible bonds, and swaps. Each has its advantages, and each is often used in a particular situation. However, Futures & Options are the most common types of Equity derivatives.