Use of Derivatives: Definition and Example

What is the definition of a derivative and give an example. What is one way you would use derivatives?

© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/finance/use-of-derivatives-definition-and-example-7fs6

Solution Preview

...ving business. Once they expire, there have zero value, unlike the underlying stock. Trading options can be exciting and either very profitable or very unprofitable.

An example of a covered call would serve the purpose to explain how they work. Go to Yahoo! Finance http://finance.yahoo.com/ and get a quote on BA (Boeing). Once on the quote screen, click on the options link on the left side. Let's say you owned 100 shares of Boeing you had purchased at ...