Derivatives: currently 240 jobs.The latest job was posted on 16 Aug 18.
Derivatives include options, futures, forwards and swaps and are, in essence, financial instruments where the price or value is dependent on something else. The something else that the instrument is derived from could be financial (such as a company share, an interest rate or a bond price) or a physical commodity (such as a barrel of crude oil or a bushel of wheat).
Both sellers and buyers of derivatives use them frequently as a form of insurance to hedge against some known risk that affects their business or investments. Futures contracts were an early example of derivatives. They were designed for product producers (such as farmers) to hedge against the risk of the price of their product falling during the period between production and distribution (the farmer’s growing season).
An option works in a similar way to a futures contract, but it includes an element of choice. A 'put option' gives the buyer the option to sell at a particular price, and a 'call option' gives the buyer the option to make the purchase at the specified amount.
Another type of derivative product is a swap. A swap is as simple as it sounds, it literally exchanges one payment, or stream of payments, for another.
Credit Default Swaps (CDS) are a good example of how derivatives can be used as a form of insurance. A CDS will specify that in return for a regular payment, in the event of a stipulated loan defaulting, the current CDS holder will receive a specified level of financial compensation.
Futures contracts were the first forms of derivatives. They were designed for product producers to hedge against the risk of the price of their product falling during the period between production and distribution.
An option works in the same way as a futures contract, but its evocation is optional. A 'put option' gives the bearer the option to sell at a particular price, and a 'call option' gives the bearer the option to make the purchase at the specified amount.
Another type of derivative product is a swap. A swap is as simple as it sounds, it literally exchanges one product for another. These are most commonly used with currencies, so that loans or interest payments can be exchanged from one currency to another.
Financial Derivatives Careers
Careers relating to financial derivatives can focus on any stage of the creation and sales process, including derivative analyst jobs, derivative sales roles, and derivative traders. The roles will usually specify the type of derivative involved – for example ‘equity derivatives sales’ or ‘commodity derivatives trader’.