Equity derivative: Difference between revisions

{{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]].

“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]]”.

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]].