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DERIVATIVES - Coggle Diagram
DERIVATIVES
Types
Forwards
Futures
Options
Swaps
What
Its like 'payback' points on use of credit cards
If stock increases, its derivative will increase
Financial instrument which derives its value form the underlying asset
Why
Hedging
Compensate for the losses
Intention is to reduce loss
Enter a derivative with intention to Hedge
Speculation
Trying to gauge the direction of movement
Short Sell - Sell First Buy Later
Intention is to earn profit
Trade
Short
Sell
Long
Buy