1. Markets from zero

Derivatives and bonds

Contracts built on other things, and loans you can trade.

Start
  • 2 lessons
  • 13 min
About this section

Two families beyond stocks, each in one page: contracts whose value comes from something else, and loans you can buy and sell.

What you will be able to do

  • Say what a future, an option and a swap are, and why people use them.
  • Explain coupon, yield, and why bond prices fall when rates rise.
  • Read a yield curve's shape in one sentence.

Five words to know

derivative
a contract whose value depends on another price
future
an agreement to buy or sell later at a price fixed today
option
the right, not the obligation, to buy or sell at a set price
coupon
the fixed interest a bond pays
yield
the yearly return a bond gives at today's price
  1. 01Derivatives in one pageA derivative is a contract whose value comes from something else (a stock, an index, oil, an interest rate), and the three big families are futures, options and swaps.6 min
  2. 02Bonds in one pageA bond is a loan you can buy and sell, paying fixed interest until a set repayment date, and its price and its yield always move in opposite directions.6 min

Educational material about reading market data, not investment advice.