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Topic
Derivatives
22 guides in Finabase Learn
- American-style option An option that can be exercised on any business day up to expiration; most US single-stock options are American style.
- Asset classes explained: stocks, bonds, cash, real assets and more What an asset class is, how stocks, bonds, cash, real estate, commodities, currencies, crypto and derivatives differ, and what 19 years of ETF prices show.
- Assignment The notice that an option seller must fulfill the contract: deliver shares on a short call or buy shares on a short put.
- At the money (ATM) An option whose strike price equals, or is very close to, the current price of the underlying asset.
- Call option A contract giving the buyer the right, not the obligation, to buy the underlying asset at the strike price before expiration.
- Contango A futures market in which later-dated contracts trade above nearer ones or the spot price, which erodes returns when rolling long positions.
- Credit Default Swap (CDS) A contract in which one party pays a regular fee to another for protection against a borrower defaulting on its debt.
- Derivative A contract whose value depends on another asset, rate or index, such as options, futures and swaps.
- Derivatives explained: forwards, futures, options and swaps What a derivative is, how the four basic contracts differ, notional value, hedging versus speculation, counterparty risk and clearing, with worked dollar examples.
- Expiration date The last day an option or futures contract is valid, after which it is exercised, settled or expires worthless.
- Futures contract A standardized exchange-traded agreement to buy or sell an asset at a set price on a future date, marked to market daily.
- Futures contracts explained: specs, clearing, expiry and settlement How a futures contract works: contract size and tick value, the clearinghouse, daily mark-to-market, expiry, and physical versus cash settlement, with CME examples.
- Futures roll Closing an expiring futures contract and opening one in a later month to keep a position, with the price gap as a cost or gain.
- Hedge A position taken to offset the risk of another, such as buying a put option to protect a stock holding against a fall.
- Open interest The number of option or futures contracts outstanding that have not yet been closed, exercised or expired.
- Option A contract that gives the holder the right, but not the obligation, to buy or sell an asset at a set price before a set date.
- Options basics: how calls and puts work, with payoff diagrams What call and put options are, how strike, expiration and premium fit together, what buyers and sellers owe each other, and how to read a payoff diagram.
- Put option A contract giving the buyer the right, but not the obligation, to sell 100 shares of a stock at a set strike price before expiration.
- Spot price The price for buying or selling a commodity, currency or other asset for immediate delivery, as opposed to a futures price for a later date.
- Strike price The fixed price at which an option holder can buy (call) or sell (put) the underlying asset, set when the contract is created.
- Underlying asset The stock, index, commodity, currency or other asset whose price determines the value of a derivative such as an option or futures contract.
- Warrant A security issued by a company that gives the holder the right to buy its shares at a fixed price before a set date, creating new shares if exercised.
Educational content, not investment advice. Finabase Learn explains how markets and tools work. It does not recommend any security or strategy, and examples are for illustration only. Investing involves risk, including the loss of principal. Rules and figures are for the United States unless stated and can change — check the cited source before you act.