A Derivative is a financial product that enables traders to speculate on the price movement of assets without purchasing the assets themselves. For example, if you think oil prices are going to go up in the future, you can buy a derivative that will pay out depending on how much the price of oil increases. This allows traders to make money off of their predictions without having to actually purchase and store oil. Derivatives can be used for a variety of different purposes, including hedging risk and speculating on price movements.Derivatives have become increasingly popular in recent years as investors have looked for ways to maximize their profits. However, they also come with a certain amount of risk, so it's important to understand how they work before investing in them. It's also important to remember that derivatives are not guaranteed investments - even if the underlying asset moves in the direction you predicted, there is no guarantee that your derivative will do likewise. So always be sure to do your research before investing in derivatives.Derivatives can be used to hedge against risk or to speculate on the price movement of an underlying asset. There are two major types of derivatives: forwards and futures. Forwards are contracts that obligate the buyer and seller to trade an asset at a specific price on a specific date in the future. Futures are contracts that obligate the buyer and seller to trade an asset at a specific price on a specific date in the future, and also obligate the buyer to purchase the asset on the specified date.
