The terminology used to describe the world of the stock exchange is as diverse as the contracts traded there. This applies in particular to derivatives trading. Futures transactions or option transactions can be used for this purpose. The selected maturity is always an important factor in this context. The actual trading takes place either on special futures exchanges, such as EUREX, or over-the-counter (OTC). Options, futures, forwards, and swaps are among the most frequently traded derivative products. For a better understanding, we describe certain features of these products below.

Options

Options offer their buyers a choice of buying (call) or selling (put) shares or other securities at a certain market value (underlying asset). However, that right is limited in time until a given maturity date. An option that has not been exercised by that date expires. For each option, at least one market value is provided daily by the trading venue.

Forwards

Forwards are derivatives not listed on the stock exchange that are based on a contract to buy or sell a defined asset at a specified price or time in the future. This makes them the over-the-counter counterpart to futures. Typically, currencies or metals are traded by forwards.

Futures

Futures are standardised contracts traded on exchanges. A buyer undertakes to purchase a defined quantity of a security at a fixed price at a certain point in the future. The other contracting party undertakes to deliver accordingly.

Swaps

Swaps involve the exchange of liabilities or receivables. This is done at the level of interest rates or currencies. Any interest rate differences between different currencies are balanced by means of a swap rate. Swaps can act as an alternative to direct financing on international financial markets.

Your benefits

• Comprehensive opportunities for derivatives trading
• Take targeted advantage of investment and market opportunities
• Forward-looking hedging of potential currency risks