Stockbrokers - 'derivatives service'

With an increasing amount of interest and activity being shown by private investors in such tools as options and futures, more and more stockbrokers are providing a specialist service to cater for this demand.

Traditional options , Traded options and futures are more complex than underlying securities.

These instuments can be so esoteric that understanding them being a bit of a 'strain on the brain'. But derivatives are flexible tools which allow you to control risk (as well as create risk - ask Nick Leeson).

At their best, they can protect you from a fall in the stockmarket in a straightforward way or they can allow you to benefit from rises or falls in the market while at the same time allowing you to keep the bulk of your cash in the bank or building society earning interest. If you are serious about using them, don't be afraid to seek out professional help.

See also: What is a stockbroker? Moneyextra's Sharedealing service

Last Updated: May 2008 © Moneyextra.com

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