5.3 Uses of Derivatives in Finance

In this section

• Hedging: A Comprehensive Guide to Risk Management with Derivatives
  Explore hedging as a risk management strategy using derivatives to offset potential losses. Learn how businesses and investors use derivatives to hedge against price movements with practical examples and case studies.
• Speculation: Profiting from Market Predictions with Derivatives
  Explore the world of speculation in derivatives trading, where high-risk strategies aim for high-reward outcomes. Learn how speculators use leverage to amplify gains and losses, and understand the dynamics of speculative activities in commodities and currency markets.
• Arbitrage: Understanding and Utilizing Price Discrepancies in Financial Markets
  Explore the concept of arbitrage, a fundamental trading strategy that exploits price differences across markets. Learn how derivatives facilitate arbitrage and enhance market efficiency.