/biz/ - Business & Finance

>>53763369
derivative go boombom

>>53763382
What buy?

>>53763392
stanks

It's duh second frum duh tawp uh duh twyangle

>>53763369
Derivatives value comes from the future price of an underlying security, so their value is "derived" from the underlying.
You can value derivatives with no-arbitrage conditions, like long a forward contract (e.g. the obligation to buy a stock at a given price in a given date) has the same payoff as borrowing the present value of the forward price and buying the underlying stock, so it must have the same value.

>>53763421
Why do linkies say that Chainlink can absorb the market cap of derivatives?

>>53763369
a scam in the traditional finance system which is also a scam build on the scam unit called the dollar. all national currencies are build on this same system scam inflation debt scam meant to collapse. just buy bitcoin

>>53763461
>so their value is "derived" from the underlying.
because links value will be derived from what it under writes which is backed up nodes which is x number of link

>>53763470
It's not a scam, hedgers can use derivatives to match the currency of cash inflows to cash outflows (currency forwards), remove interest rate risk (forward rate agreements), remove default risk (credit default swaps), downside risk (puts) etc.

>>53763461
Sorry, I don't waste my time with crypto.

>>53763461
That's just standard linkie delusion.

>>53763369
Basically, you're 1000x poorer than you think you are. There are literal trillionaires in this world that have so much money that even they don't really appreciate how much it actually is. They're so rich that living a billionaire lifestyle is considered low key to them.

>>53763369
they derive their value from some underlying security, with no inherent value of their own

>>53763369
If I bet you $10 the s&p 500 will be up next week. that's a "derivative" because the value of that bet is derived from the value of another asset - the s&p 500. and we just created $20 notational of derivatives.

>>53763369
Why? Your image explains it perfectly.

>>53763421
For those of you too retarded to understand this, he's basically saying that rich people just print money out of thin air and they own you. Then, when they fuck up, they make you pay for it with your tax dollars kek

>>53763369
Golden rules of derivatives
>already priced in
If you dont understand HV and IV pic related.

They are contracts traded based off an underlying asset. Options and futures are, in my opinion and likely most other peoples as well, the most fundamental form of derivatives. Now, our system runs on Fiat currency, meaning that you can essentially borrow infinite currency, which means that borrowing money is how you make money in such a system. This means that derivatives can functionally increase your leverage and exposure to underlying assets by extremely large multiples.

Where derivatives start to get funky and make up the bedrock of the current financial system in my opinion is with risk and duration transformations. For example, a bank needs to hold an asset for an indeterminate amount of time and yield, they can immediately turn that asset into cash by transferring the risk and duration to another party by selling a swap on the asset, where-in they will pay that party any excess gain or loss on that asset and in return they will receive fixed payments instead. This gives you a product that can be sold immediately for a set amount with guaranteed cash flows and low risk, because other parties are holding and betting on all that risk and maturity instead. Cash flows are heartbeats of the financial world, anything will a pulse can have some lipstick put on it and sold for immediate cash upfront. Fixed leg payments on derivatives contracts are such a cashflow, and indeed that is what made synthetic CDO’s that crashed the economy in 2008 when those riskless insturments were shown to be a farce.

Risk and duration transformations are what make derivatives a multi trillion almost quadrillion dollar industry. Nothing is what it seems in finance, you may be the safest bank in the world but when you get that bank in the (off balance) sheets they’re a freak, with exposure to Bitcoin and oil and TSLA through complex esoteric derivative swaps, they took on all that risk and all they hold is bonds for fixed income leg swap payments on their official 10-K’s

>>53763461
All shitcoiners end up saying this at some point.

>>53763461
Because they’re retarded, they think that they can automate derivatives contracts, what they don’t tell you is derivatives are already automated because you either are in bed with the brokers already or you bend over for them anyway

>>53763369
It is anything that DERIVES its value from something else. So if I have one nigger slave and I write a document that says “My nigger will do 1 day of work for anyone who holds this paper.” That paper is a derivative, deriving its value from the work of my slave. You could sell that paper to someone else for money, etc

>>53763369
This diagram is retarded.

>>53763461
This is a common nonsensical thing that people new to crypto say regarding all kinds of projects. It’s just a form of copium and “what if’ism”

>>53764621
so to fix the financial system we need to bring back slavery

>>53764642
Slavery was a terrible system. The slave's cost of ownership was the price of feeding and (shabbily) housing him, so any laborer who demanded more than that would not have been hired. Slavery thus depresses wages - and it also hinders innovation, because there's less incentive to invest in technology and machinery if the slaves are so cheap.
It's only a modern falsification of history that, somehow "the blacks" were owned by "the whites". The overwhelming majority of Whites owned no slaves and were harmed by slavery. Slave owners were a tiny set of moneyed gentry that owned plantations. Because they held so much political power, they got the southern US states to secede and told Whites in those states some story about it being about racial supremacy, but this was just propaganda.

>>53763507
Why is the derivatives market so large? Surely it's not not all hedging, is it?

Don't worry about derivatives, retard.

>>53765434
It’s technically all hedging yes. It looks so large because this “pyramid” calculates them based on notional value of the derivatives, when actually the market value of the derivatives are much smaller. Like you buy $4000 SPY options and it’s notional $1 million or whatever but the actual value is only $10000. Interest rate swaps probably are the most notorious for this, you calculate interest rate swaps on like hundreds of billions of dollars worth of notional, but because the moves are so small on rates you only ever trade a couple hundred million in actual margin

>>53763461
Because they don't know what they're talking about as that makes no sense in any context

Legalised Jewish fraud. Will destroy literally everyone's pension and lead to civil war and riots. So kinda based in a way.

>>53763369
What's fucked up is they aren't really derivative anymore.

>>53766491
Such a brainlet take. It’s based if anything, who the fuck wants to get cucked by some boomer board members fucking with your shares, just make a private contract promising to return the value of the stock instead and cut out the corporate low lifes from your investment decision.

>>53763369
let's say you want to buy the btc someone else sells
that's spot market
let's say you are a moron who just want to gamble on the price of btc and buying a shitty contract on a rigged and scammy jewish exchange, the you would be placing bets like sport betting, in dollar,
on the price of btc
that's a derivative
to make it worse they make you gamble with leverage, so kikes can steal your money even faster

>>53764566
>They are contracts traded based off an underlying asset.
no, they are traded based on the stupidity of absolute morons who cannot understand that the difference between spot market price, reflect real supply/demand (especially on supply limited commodities) and price gambling on virtually infinite securities that should represent some underlying that only exists in their monkey brains but not in real world
do you want an example? take ftx, they "supposedly" had "collateral backing 100k BTC" in a giant pool of (((equivalent))) mixed-asset liquidity, but in reality they had zero BTC
that's the fallacy of derivatives and yes, they are a jewish scam based on supply dilution and propped up by other jewish arbitrageurs that keep the scam alive cause they profit both from liquidations and fees skimming

>>53766732
Mad for what, spot generally refers to the price of an underlying commodity specifically yes. That’s why they are called derivatives, they are derived from the price of the underlying asset.

I said fuck all about it reflecting “real supply” btw, we don’t disagree, but getting mad because someone wants to trade something based on another asset is dumb

RBX is coming out with crypto derivatives in the near future.

>>53763369
low IQ diagram. gold and silver should be equal, and crypto should be between gold/silver and base money

>>53768198
Because that doesn’t sound like a legal clusterfuck just waiting to happen

>>53768217
Crypto is a derivative of BTC, and BTC is a derivative of the US Dollar, which is a derivative of Gold and Silver.