derivative instrument

Definitions of derivative instrument

1. noun

   a financial instrument whose value is based on another security
   synonyms: derivative

   types:

   futures contract

   an agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date; the contract can be sold before the settlement date

   option

   the right to buy or sell property at an agreed price; the right is purchased and if it is not exercised by a stated date the money is forfeited

   naked option

   a put or call option for which the seller or buyer has no underlying security position

   covered option

   a put or call option backed by the shares underlying the option

   call, call option

   the option to buy a given stock (or stock index or commodity future) at a given price before a given date

   put, put option

   the option to sell a given stock (or stock index or commodity future) at a given price before a given date

   straddle

   the option to buy or sell a given stock (or stock index or commodity future) at a given price before a given date; consists of an equal number of put and call options

   incentive option, incentive stock option

   an option granted to corporate executives if the company achieves certain financial goals

   stock-index futures

   a futures contract based on a stock index; a bet on the future price of the indexed group of stocks

   stock option

   the right to buy or sell a stock at a specified price within a stated period

   lock-up option

   an option to buy the crown jewels offered to a white knight in order to forestall a hostile takeover

   type of:

   instrument, legal document, legal instrument, official document

   (law) a document that states some contractual relationship or grants some right