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Derivatives are securities which are linked and valued based on a stock, bond, currency or a commodity. The four main groups of derivative contracts are futures, forwards, options and swaps.

A quick overview of the four groups. Futures and Forwards are essentially the same concept, two parties must be involved taking opposite views on the exchange of the underlying in the future. The difference is that futures are exchange-traded contracts and are standardised. A Forward contract is the same concept, but the contract is decided between the two counterparties to the trade. Option contracts can be either a Call Option, the right to Buy, or a Put Option, the right to Sell. Swaps are essentially an exchange of cash flows, for example in Interest Rates Swaps from Fixed to Floating or the other way around.


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Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: or Telegram +393339034488

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