Derivatives Trading
Master the art of hedging risks and maximizing returns through sophisticated financial instruments
Types of Derivatives
Understand different derivative instruments and their unique characteristics
Futures
Contract to buy/sell an asset at predetermined price on future date
Options
Contract giving right (not obligation) to buy/sell at predetermined price
Swaps
Agreement to exchange cash flows or liabilities
Forwards
Customized contract to buy/sell at future date (OTC)
Master Derivatives Trading
Learn everything about derivatives from basics to advanced strategies
Understanding Derivatives
Derivatives are financial contracts whose value derives from an underlying asset such as stocks, commodities, currencies, or market indices. They don't represent ownership but rather the right or obligation to buy/sell the underlying asset.
Key Concept: Leverage
Derivatives allow you to control a large position with a small amount of capital (margin). This leverage can amplify both profits and losses significantly.
Primary Functions
- • Price Discovery: Market expectations about future prices
- • Risk Management: Hedge against price fluctuations
- • Speculation: Profit from price movements
- • Arbitrage: Exploit price differences across markets
Pricing Factors
- • Spot Price: Current market price of underlying asset
- • Time to Expiry: Time remaining until contract expiration
- • Volatility: Expected price fluctuations
- • Interest Rates: Cost of carrying underlying asset
Tools & Resources
Essential tools for successful derivatives trading