Derivative securities are a chance for everyone

Many citizens of our vast country and other countries of the former Soviet Union after the dissolution of the latter were given the opportunity to conduct their own affairs. The majority rushed to buy-sell, because, at that time, this is really a fast way to obtain super profits. A separate contingent decided to invest in production with a long-term prospect of profit. And only a few paid attention to international markets, including stock markets. Today, this situation has largely changed thanks to, of course, the development of the Internet. However, many are in a hurry to make deals, even without having received minimal knowledge in this area.

Many people have a hard time imagining the difference between basic and derivative securities, why they are needed and what role they perform. If clarity is still present in the issues of basic assets, then the derivatives arise problems, and after all, they are for an experienced player on the stock exchange, often more interesting than the underlying assets. Initially, it is worth noting the fact that derivative securities are more flexible, if you will, a universal tool in the stock market.

Properties

First of all, it should be noted that domestic securities (they are also derivatives) have a price, which in all respects is tied to the price of the underlying asset. Secondly, the acquisition of such financial instruments as derivative securities by definition does not require the initial investment of significant capital, while earning a profit comparable in their volume with the underlying securities. And lastly, this kind of paper is of an extremely urgent nature.

A bit of history

It is worth noting that the market where basic and derivative securities are represented is naturally an integral part of the world market in its global sense. Despite its 150-year history, derivative securities before the 1970s of the 20th century practically did not bear any significant role in the formation of financial flows. The stimulus to the active development of this market was the general liberalization of the world economy, in general, and the financial system, in particular, and the formation of floating exchange rates played a significant role in this aspect. In addition, if earlier the derivatives market was purely exchange-traded, in the current economic conditions it is already developing in two directions, including entering the over-the-counter securities market. This fact, in many respects, contributes to the expansion of potential opportunities, including in the field of insurance of possible risks. Naturally, it could not affect the development of the market, representing domestic securities, over the past 10 years, a 20-fold increase in the volume of transactions made on standard, basic securities.

Development prospects

As in other areas of human activity, the globalization process plays a big, almost critical role, in the sense that more and more players appear on the market, ready to work with such financial instruments as derivative securities. In addition, analysts and experts believe that serious future dominance of interest-bearing contracts, such as options and futures, will continue, especially on government bonds.

In conclusion, it should be noted that derivatives are inherently attractive, first of all, to private investors. The reasons for this are quite simple - low volume of necessary investments and relatively high profit in comparison with other financial instruments, which makes it possible to try your hand at the stock exchange even for a common person, considering the development of the Internet.