Blog Posts

Adding utility stocks to a portfolio can enable traders and investors to add a lower-risk type of equities to their portfolio that can generate income by paying dividends. Utilities are a type of essential. When we covered consumer staples stocks, we talked about their value in terms of the fact that people will always need […]

Trading from home and earning a lucrative salary doing so sounds like the ideal goal for anyone who has a passion for the financial markets. Nevertheless, unless you have a lot of start-up capital to work with, and plenty of talent to go along with it, it’s a bit of a lofty goal at the […]

What are exotic derivatives? Exotic derivatives are types of financial instruments (e.g., futures, swaps, forwards, options, and other agreements) that are made on non-traditional financial arrangements. Exotic derivatives will typically be chosen by market participants to fit certain needs for purposes of hedging, speculation, or portfolio diversification. What kind of exotic derivative products are there? […]

Weather derivatives are one type of derivative. They allow companies and governments to hedge their risks associated with adverse or unexpected weather conditions as part of an overall risk management strategy. For instance, a company that produces food agricultural commodities may want to enter into a weather derivative contract to protect itself from the risk […]

A property derivative is underwritten by an underlying real estate asset. Individual real estate assets are illiquid and hard to price accurately because they sell infrequently. Because of this, it’s common for property derivatives to be based on property indexes. Real estate property indexes take into account aggregate information on prices within a certain city or multiple cities. This, […]

Inflation derivatives are a type of exotic derivative, which give the holder the right, but not the obligation, to receive a payment based on the rate of inflation during a certain period of time. This type of derivative can be used by investors as a hedge against rising prices. The inflation derivative is an OTC […]

Freight derivatives include container freight swap agreements, container freight derivatives, physical deliverable freight derivatives, forward freight agreements (FFA), and other derivatives based on these. Forward Freight Agreement (FFA) A Forward Freight Agreement, or FFA, is a contract between two parties to buy or sell goods at a future date and price. FFAs are often used to hedge […]

An energy derivative is a derivative based on an underlying energy asset or product, such as crude oil, natural gas, gasoline, electricity, or other energy products. Energy derivatives can exist in the forms of futures and options or OTC derivatives such as swaps, forwards, and other types of options. Those who participate in the energy derivatives markets […]

Variance swaps are an OTC financial derivative used to hedge risks and/or speculate on a movement in the price of a certain asset or index, volatility, interest rate, or exchange rate. One leg of the swap pays an amount based on the realized variance of the price changes (as it pertains to the underlying asset, […]

China’s economy will naturally slow over time. Its population is already older. Its productivity will still rise faster than western developed economies as plays catch-up and its per-capita incomes get more in line. But a lot of growth that was fueled by credit will start to slow. Its slowdown is eliciting familiar warnings that, as […]