We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What does a Derivatives Analyst do?

John Lister
By
Updated Mar 02, 2024
Our promise to you
Practical Adult Insights is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At Practical Adult Insights, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A derivatives analyst works in one of the most complicated areas of financial trading. A derivative is something which is bought and sold, but is not a specific product in itself, such as stock in a company or a commodity like gold. Instead a derivative is something which derives its value from the price of something else.

One example of a derivative is a futures contract. This is a contract between two parties in which one party agrees to buy a commodity or financial instrument from the other at a set price at a pre-determined future date.

The idea of having such a contract is that it’s possible the market price will be higher than the agreed purchase price when the contract comes due. The buyer can then immediately sell the stock at a profit. However, if the price is the same or lower, the buyer will usually not exercise the option and will have wasted whatever money they paid for the contract. Contracts are often bought and sold to new investors several times before they come due. The price will depend on how confident people are that having the contract will be profitable when it comes due.

There are many other types of derivatives, including those based on the overall value of a stock market on a set date, or on currency exchange rates. Some derivatives give the holder a right to sell something rather than buy it. With so many different set-ups, and so many factors affecting the profitability of holding a derivative, there is a vast amount of data to take into account.

The main role of a derivatives analyst is to gather and analyze this data. This is carried out to provide useful information so that traders and managers can make more accurate and informed decisions when deciding upon investments. Some derivatives analysts will also be required to produce reports for clients.

The role of derivatives analyst does not usually have the same type of mandatory qualifications and examinations such as teaching or medicine. A proven track record in related activities can be as important as formal qualifications. However, many firms have particularly wide lists of requirements for potential employees.

Many firms will demand some form of degree in a related subject such as mathematics or actuarial science. Most firms will require formal training in software used by derivatives analysts. In some cases, candidates will need to have programming skills so that they can develop software to analyze data in new and often more complicated ways.

Salaries for a derivatives analyst can be very high. Like many jobs, the salary can vary immensely from region to region. For example, a derivatives analyst in New York may earn at least 50% more than one in a more rural state such as Idaho. This is largely because the biggest firms are based in major financial centers.

However, salaries for derivatives analyst posts can be very volatile. In the space of the two years leading up to June 2009, the average salary for vacant posts dropped by around 15 per cent before recovering to roughly the same level as it started. This is likely a sign that jobs may be harder to come by when there is a lack of confidence among investment firms.

Practical Adult Insights is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
John Lister
By John Lister , Former Writer
John Lister, an experienced freelance writer, excels in crafting compelling copy, web content, articles, and more. With a relevant degree, John brings a keen eye for detail, a strong understanding of content strategy, and an ability to adapt to different writing styles and formats to ensure that his work meets the highest standards.

Discussion Comments

By Writeresse — On Dec 18, 2014

As the above article described, a "Derivatives Analyst" makes forecasts on the various derivatives markets. They -- derivatives -- seem intangible to me and much more difficult to understand than the buying and selling of company stocks, for example. Yet, I feel like I should understand this area more particularly when it's been described as a market of over a quadrillion dollars! Does anyone have any tips to help me understand this topic better?

John Lister

John Lister

Former Writer

John Lister, an experienced freelance writer, excels in crafting compelling copy, web content, articles, and more. With...
Learn more
Practical Adult Insights, in your inbox

Our latest articles, guides, and more, delivered daily.

Practical Adult Insights, in your inbox

Our latest articles, guides, and more, delivered daily.