Review:
Derivatives
overall review score: 4.2
⭐⭐⭐⭐⭐
score is between 0 and 5
Derivatives are financial instruments whose value is derived from an underlying asset or group of assets.
Key Features
- Leverage
- Hedging
- Speculation
- Risk management
Pros
- Can be used for hedging against market fluctuations
- Provide opportunities for speculation and profit
- Allow for leverage to magnify investment returns
Cons
- High risk due to leverage
- Complexity and potential for mispricing
- Regulatory scrutiny and oversight