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Derivatives: An explanation

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by Paddy Hirsch
Thursday, October 15, 2009 - 21:36

Credit default swaps? They're complicated -- and scary! The receipt you get when you pre-order your Thanksgiving turkey? Not so much. But they have a lot in common: They're both derivatives. Senior Editor Paddy Hirsch explains.

About the author

Paddy Hirsch is the Senior Producer, Personal Finance at Marketplace and the creator and host of the Marketplace Whiteboard. Follow Paddy on Twitter @paddyhirsch and on facebook at www.facebook.com/paddyhirsch101
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James McPhillips's picture
James McPhillips - Oct 24, 2009

Paddy,
Can you please explain the need for both the Treasuruy AND the Federal Reserve

senthil sivasamy's picture
senthil sivasamy - Oct 22, 2009

Paddy should talk more about structured finance and CDO's.

Andrey Rudomiotov's picture
Andrey Rudomiotov - Oct 21, 2009

@Josh..."The S&P500 is not an exchange for trading derivatives!? It's an index of large-cap stocks."

I'm sure Paddy just had a slip up. Everyone is human, friend.

@Nancy...

The best way by far to download these and other podcasts would be to download iTunes, then download whichever podcast from the iTunes store. All the APM podcasts are free by the way.

don hollinger's picture
don hollinger - Oct 20, 2009

Paddy

Very well thought out and lucid presentation on derivatives.

However, I believe you missed the point on CDF’s.

You described the futures market quite well.

It is my understanding that CDF’s are insurance on someone (like GM or Ireland) defaulting on their bonds.

Unfortunately one doesn’t have to own the underlying security to get a CDF on it. It is like me buying insurance on your house.

Pretty scarry.

Regards,

Don

Josh Humphreys's picture
Josh Humphreys - Oct 16, 2009

The S&P500 is not an exchange for trading derivatives!? It's an index of large-cap stocks.

Nancy Lewit's picture
Nancy Lewit - Oct 16, 2009

Dear Paddy,
Your video on derivatives is fantastic..a wonderful learning tool!Is there a way I can save it to watch,(only for my own personal use)at my leisure? Thank you! Best wishes, Nancy R. Lewit

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