Underlyings offered with options
In this lesson, we’ll cover the various assets available for trading derivatives on the Deriv platform, including both financial assets and Derived Indices. Understanding these offerings will empower you to capitalize on diverse trading opportunities and enhance your overall trading experience.
Financial Assets Available on Deriv
Deriv provides derivatives for a wide range of financial assets, allowing you to engage with various markets:
- Forex Pairs: Including popular currency pairs like EUR/USD, GBP/USD, and USD/JPY.
- Stock Indices: Derivatives on key stock indices, allowing you to trade on broader market movements.
- Cryptocurrencies: Trade derivatives on popular cryptocurrencies, capturing price changes in the ever-evolving crypto market.
- Commodities: Engage with commodities like oil and gold, benefiting from their pricing fluctuations.
This variety enables you to explore multiple markets and design strategies tailored to different asset types.
Understanding Derived Indices
Derived Indices are unique to Deriv and can be broadly categorized into two types: Basket Indices and Synthetic Indices.
Basket Indices
Basket Indices provide exposure to the collective performance of underlying assets. Here are the available Basket Indices:
- Gold Basket: Measures the value of gold against a basket of five global currencies (EUR, GBP, JPY, AUD, USD), each weighted equally at 20%.
- Forex Baskets: Track the value of major currencies (AUD, EUR, GBP, USD) against a balanced basket of five global currencies, also weighted equally at 20%.
These indices allow traders to speculate on the general direction of the basket, spreading risk across multiple currencies and helping to mitigate exposure to any single asset. For instance, the Gold Basket provides a balanced approach to trading gold without excessive reliance on the US dollar.
Volatility Indices
Volatility Indices are synthetic indices that replicate how asset prices fluctuate at different constant volatility levels. They provide smooth, continuous price movements based on specific volatility criteria. Deriv offers volatility ranges, such as:
- Volatility 10 Indices (10% annual volatility)
- Volatility 50 Indices (50% annual volatility)
- Volatility 100 Indices (100% annual volatility)
You can choose between one-second or two-second tick frequencies, depending on your trading preferences. The higher volatility indices have larger price swings, making them suitable for more aggressive trading strategies, while lower volatility indices may align better with risk-averse traders.
Jump Indices
Jump Indices simulate a market environment where shocks can happen, based on the Volatility Index methodology. These indices generate periodic larger-than-usual price jumps, averaging approximately once every 20 minutes. The Jump Indices range from 10 to 100 and provide traders with increased volatility, adding further options for trading strategies.
Crash and Boom Indices
For traders looking for rapid price shifts, the Crash and Boom Indices are ideal.
- Crash Indices: These indices experience steady price increases followed by sudden drops, with the frequency of crashes varying depending on the specific index level.
- Boom Indices: Conversely, these involve consistent price declines that culminate in sharp surges. Traders can capitalize on these patterns by strategically timing their trades with the expected movements.
Step Indices
Categorized by fixed step values, Step Indices move in defined increments. For instance, the standard Step Index has a step size of 0.1, while the various Step Indices (200, 300, 400, and 500) have incrementally larger step sizes. These indices create a predictable trading environment, appealing to traders with both short- and long-term strategies.
Daily Reset Indices
Daily Reset Indices, including the Bull Market and Bear Market Index, simulate a market trend over a 24-hour period. They reset to base values daily, offering predictability:
- Bull Market Index: Tends to trend upward and resets to 1,000 every 24 hours.
- Bear Market Index: Tends to decline consistently, also resetting to 1,000 at the start of each day.
These indices provide a structured approach to trading with lower risk due to their predictable daily trends.
Conclusion
In this lesson, we explored the diverse range of financial assets and Derived Indices available for trading on Deriv. Understanding these offerings allows you to tailor your trading strategies to fit your goals, preferences, and risk tolerance.
As you engage with these assets, remember to apply sound risk management principles to protect your capital and enhance your trading outcomes. In the next lesson, we will dive deeper into specific strategies for trading these indices effectively.
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Underlyings offered with options
In this lesson, we’ll cover the various assets available for trading derivatives on the Deriv platform, including both financial assets and Derived Indices. Understanding these offerings will empower you to capitalize on diverse trading opportunities and enhance your overall trading experience.
Financial Assets Available on Deriv
Deriv provides derivatives for a wide range of financial assets, allowing you to engage with various markets:
- Forex Pairs: Including popular currency pairs like EUR/USD, GBP/USD, and USD/JPY.
- Stock Indices: Derivatives on key stock indices, allowing you to trade on broader market movements.
- Cryptocurrencies: Trade derivatives on popular cryptocurrencies, capturing price changes in the ever-evolving crypto market.
- Commodities: Engage with commodities like oil and gold, benefiting from their pricing fluctuations.
This variety enables you to explore multiple markets and design strategies tailored to different asset types.
Understanding Derived Indices
Derived Indices are unique to Deriv and can be broadly categorized into two types: Basket Indices and Synthetic Indices.
Basket Indices
Basket Indices provide exposure to the collective performance of underlying assets. Here are the available Basket Indices:
- Gold Basket: Measures the value of gold against a basket of five global currencies (EUR, GBP, JPY, AUD, USD), each weighted equally at 20%.
- Forex Baskets: Track the value of major currencies (AUD, EUR, GBP, USD) against a balanced basket of five global currencies, also weighted equally at 20%.
These indices allow traders to speculate on the general direction of the basket, spreading risk across multiple currencies and helping to mitigate exposure to any single asset. For instance, the Gold Basket provides a balanced approach to trading gold without excessive reliance on the US dollar.
Volatility Indices
Volatility Indices are synthetic indices that replicate how asset prices fluctuate at different constant volatility levels. They provide smooth, continuous price movements based on specific volatility criteria. Deriv offers volatility ranges, such as:
- Volatility 10 Indices (10% annual volatility)
- Volatility 50 Indices (50% annual volatility)
- Volatility 100 Indices (100% annual volatility)
You can choose between one-second or two-second tick frequencies, depending on your trading preferences. The higher volatility indices have larger price swings, making them suitable for more aggressive trading strategies, while lower volatility indices may align better with risk-averse traders.
Jump Indices
Jump Indices simulate a market environment where shocks can happen, based on the Volatility Index methodology. These indices generate periodic larger-than-usual price jumps, averaging approximately once every 20 minutes. The Jump Indices range from 10 to 100 and provide traders with increased volatility, adding further options for trading strategies.
Crash and Boom Indices
For traders looking for rapid price shifts, the Crash and Boom Indices are ideal.
- Crash Indices: These indices experience steady price increases followed by sudden drops, with the frequency of crashes varying depending on the specific index level.
- Boom Indices: Conversely, these involve consistent price declines that culminate in sharp surges. Traders can capitalize on these patterns by strategically timing their trades with the expected movements.
Step Indices
Categorized by fixed step values, Step Indices move in defined increments. For instance, the standard Step Index has a step size of 0.1, while the various Step Indices (200, 300, 400, and 500) have incrementally larger step sizes. These indices create a predictable trading environment, appealing to traders with both short- and long-term strategies.
Daily Reset Indices
Daily Reset Indices, including the Bull Market and Bear Market Index, simulate a market trend over a 24-hour period. They reset to base values daily, offering predictability:
- Bull Market Index: Tends to trend upward and resets to 1,000 every 24 hours.
- Bear Market Index: Tends to decline consistently, also resetting to 1,000 at the start of each day.
These indices provide a structured approach to trading with lower risk due to their predictable daily trends.
Conclusion
In this lesson, we explored the diverse range of financial assets and Derived Indices available for trading on Deriv. Understanding these offerings allows you to tailor your trading strategies to fit your goals, preferences, and risk tolerance.
As you engage with these assets, remember to apply sound risk management principles to protect your capital and enhance your trading outcomes. In the next lesson, we will dive deeper into specific strategies for trading these indices effectively.
Quiz
What types of financial assets can you trade derivatives on at Deriv?
What is the key feature of Basket Indices?
How do Jump Indices differ from traditional Volatility Indices?
Trade with confidence
