What are some derivatives which an individual investor can use beside futures,swaps and options?

What are some derivatives which an individual investor can use beside futures,swaps and options?


and do online traders offers the option of short selling?


What tools are there for leveraging besides options?|||It pretty much depends on how well capitalized you are. I think that if you can trade swaps, you can trade any number of other derivatives (last I checked, I worked for a firm where we had to keep $50M in a prime brokerage account to trade interest rate swaps). However, add forwards to the list and you have a huge percentage of the derivative trading on the planet. In fact, I think the only big category left out are credit and mortgage derivatives.





Many online traders allow you to short liquid stocks. Now that interest rates are really low, it doesn't feel like you are getting cheated too badly by letting them keep the short proceeds without paying you much interest.





For leverage you can (besides above-mentioned derivatives):


a) Buy warrants which are similar to calls except that there is dilution if they are exercised.


b) Buy convertible bonds which have embedded warrants, though it's not clear this gives you lots of leverage


c) Buy leveraged mutual funds or (more likely) ETF's that return multiples of index returns.


d) Invest with a hedge fund that has broker/dealer status (you don't get any say on investments then of course)


e) Buy mortgage derivatives or tranched debt derivatives. (You probably shouldn't do this unless you really know what you are doing)


f) Invest in companies that are highly leveraged. You can't borrow 5:1 to invest in equity, but you can invest in companies with 5:1 debt to equity ratios which is largely the same thing. These will likely be high beta stocks.


g) Borrow money from your brother in law/credit card/Vinny Needlenose and invest it.|||Joey v could not have said it any better.



Mike



I stick with option because I love the ratio you leverage.