Equity derivative: Difference between revisions

no edit summary
No edit summary
 
(4 intermediate revisions by the same user not shown)
Line 1: Line 1:
{{anat|eqderiv}}
{{anat|eqderiv|{{Eqderiv short TOC}}}}Step this way into the world of [[synthetic equity swap]]s, [[contract for differences]], and all the manifold and beautiful ways uyou can take on, or lay off, exposure to a [[share]] or a [[Basket - Equity Derivatives Provision|basket]] without actually ''buying'' it. An [[equity derivative]] is a contract that ''references'' the performance of shares and share indices. They are most usually documented under {{eqdefs}}, so the place you should immediately visit is the [[JC]]’s [[Equity Derivatives Anatomy]].
An equity derivative is a derivative contract that references the performance of equities and equity indices. The technical term for an [[equity derivative]] referencing more than one {{eqderivprov|share}} or {{eqderivprov|Index}} is a {{eqderivprov|Basket}}.


[[Equity derivatives]] are most usually documented under the {{eqdefs}}, and the place you should immediately visit is the [[Equity Derivatives Anatomy]].
“High [[delta]]” [[equity derivatives]] that replicate, one-for-one, the economic effect of cash [[equities]] trading are often called “[[synthetic equity swaps]]” or “[[synthetic prime brokerage]].


High [[delta]] [[equity derivatives]] that replicate the economic effect of cash [[equities]] trading are often called “[[synthetic equity swaps]]” or “[[synthetic prime brokerage]]”.
The starting assumption is that the underlying share already exists in the market: equity derivatives are a creature of the ''[[secondary market]]''. So there’s not a lot of chat here about initial public offerings, subscription agreements and all that sort of thing. So the sorts of rights an initial subscriber might have (the {{eqderivprov|Hedging Party}}) won’t automatically translate through to the holder of a synthetic exposure under an [[equity derivative]].
 
The starting assumption is that the underlying share already exists in the market. So there's not a lot of chat about initial publis offerings, subscription agreements and all that sort of thing. So the sorts of rights an initial subscriber might have (the {{eqderivprov|Hedging Party}}) won’t automatically translate through to the holder of a synthetic exposure under an [[equity derivative]].


====Types of [[equity derivative]]====
====Types of [[equity derivative]]====
Line 29: Line 26:
*'''{{eqderivprov|Hedging Disruption}}''': where the market is finctioning, but for some reason there are impediments to efficiently or legally hedging an exposure under an equity derivative.
*'''{{eqderivprov|Hedging Disruption}}''': where the market is finctioning, but for some reason there are impediments to efficiently or legally hedging an exposure under an equity derivative.


{{seealso}}
{{sa}}
*[[Contract for difference]]
*[[Contract for difference]]
*[[Synthetic prime brokerage]]
*[[Synthetic prime brokerage]]
*[[Prime brokerage transactions]]