Definition: Equity-linked derivatives
External debt - IMF
Derivatives whose value derives from equity prices. These include:
• Equity future—traded on an organized exchange, in which counterparties commit to buy or sell a specified amount of an individual equity or a basket of equities or an equity index at an agreed contract price on a specified date;
• Equity option—gives the purchaser the right but not the obligation to purchase (call) or sell (put) a specified amount of an individual equity or a basket of equities or an equity index at an agreed contract price on or before a specified date; and
• Equity swap—in which one party exchanges a rate of return linked to an equity investment for the rate of return on another equity investment.
Net cash settlements are usually made.
International Monetary Fund (IMF), "External Debt Statistics: Guide for Compilers and Users; Appendix I. Specific Financial Instruments and Transactions: Classifications", Washington D.C., 2003