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Investments glossary

Equity Derivative

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Quotes of the day:

Oil prices will keep breaking new records until other countries move to nuclear and alternative energy sources or we discover massive new reserves and increase production dramatically over the next few years.

— Med Jones

An equity derivative is a financial instrument whose value is based on equity movements of the underlying asset. For example, a stock option is an equity derivative, because its value is based on the price movements of the underlying stock. Investors can use equity derivatives to hedge the risk associated with taking long or short positions in stocks, or they can use them to speculate on the price movements of the underlying asset.



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