Why Derivatives Are Used in Finance

In this section

• How Derivatives Are Used for Hedging
  Understand hedging as the use of derivatives to reduce or offset unwanted exposure to market risk.
• How Derivatives Are Used for Speculation
  Learn how traders use derivatives to take directional views and magnify gains or losses through leverage.
• How Derivatives Are Used for Arbitrage
  Understand arbitrage as the use of derivatives and related markets to exploit temporary pricing differences.