Equity Derivative

Category: finance

A financial instrument whose value is derived from the performance of an underlying equity.

Equity derivatives include stock options, index futures, and swaps. They are used to hedge risk (insurance for your stocks) or to magnify gains through leverage. They represent the "mathematical layer" of equity ownership.

Common Examples

• Our firm utilizes various equity derivatives to create a neutral-delta portfolio that profits regardless of market direction.
• The sophisticated use of equity derivatives requires constant risk monitoring to prevent unintended exposure to leveraged swings.