Tim Bennett Explains: What are derivatives?

Derivatives scare as many investors as they excite. In this short video I aim to demystify two of the most important types - futures and options.

[@ruochenlin7994]

Very educational!

[@raulgarcia1760]

you da best tim!!!

[@ismailnuckchady5752]

Great video!

[@sidk5919]

Thank you sir.

[@proneyex]

Hi Tim. I have been following your videos and enjoy your content. I have been making some calculations from your videos of figures directors do not want you to see and 6 signs a company is in trouble, etc. I wanted to ask you for some companies I cannot find the ratios online or they have a zero value on ratios or matrices such as PE, PEG, EPS. How can I calculate some of the important ratios then? Please advise Thanks Tim

[@proneyex]

Certainly does. Thank you for your prompt reply. Lastly, why do you prefer Price to FCF? Is it company or sector dependent?

[@proneyex]

Thank you very much and keep up the great videos. I really enjoy them and learn

[@JunoNH]

So the buyer stood to make 1000 from the sale, but 500 of that he already invested in the contract itself, meaning a net profit of 500. Equally the seller already banked 500 and only stood to lose 500 when offset against the income from the contract. Options seem like a less beneficial investment for the buyer than a future because the market has to go up by a certain value before you see any return, but a future benefits from any upward movement straight away. and in the opposite direction the option is an irretrievable cost but a future is still less of loss up until it breaches the price of the option, and it can be sold before that point anyway.