Derivatives Overview
Derivatives trading gives you opportunities to participate in the various exchanges by entering into an agreement to exchange cash or assets over time based on the underlying asset.
Derivatives are usually traded for 2 purposes: hedging and speculating. As such, a major characteristic of derivatives trading lies in the fact that you can profit from trading when the market goes up or down, compared to when the market moves north only. Derivatives are also often leveraged, such that a small movement in the underlying value can cause a large difference in the value of the derivative. This means that a small amount of initial money used for trading can result in an exponential gain or loss. Products traded on exchanges are index futures and options & stock futures and options.
