Derivate

A derivative is a financial instrument derived from an underlying asset, for instance a share. Derivatives come with certain obligations and rights for investors that can make them financially attractive. An example is the right to buy a share at a specific time at a specific price. If, at that point in time, the actual share price is higher than the price hedged by the derivative, the holder of the derivative has the right to purchase the share at the lower price. If, on the other hand, the actual share price is lower at that time, this right becomes inconsequential. Because of their complexity, derivatives are not suitable for people who have little investment experience.