Sublime

A derivative is a contract whose value is derived from another underlying asset such as stocks, commodities, currencies, indexes, bonds, or interest rates. Traders can use derivatives to hedge their positions and decrease their risk in any particular trade. For example, imagine you are a glove manufacturer and want to hedge yourself from an unexpec

Derivatives serve a valuable purpose. As with any contract, their aim is to shift risk within a market to someone better able to carry it. That’s a good thing, for the market, and the economy generally. That we’ve just seen an economy detonated by derivatives gone wild shouldn’t lead us to ban (as if we could) these financial innovations. It should

Some of the reasons investors trade derivatives are to hedge themself against the volatility of the underlying asset, speculate on the directional movement of the underlying asset, or leverage their holdings. Derivatives are extremely risky, and one must be equipped with strong financial knowledge and strategies when trading them.