Publisher's Synopsis
There are many types of financial instruments that are grouped under the term derivatives, but options, futures and swaps are among the most common. One of the uses of derivatives is as a tool to transfer risk (i.e. hedging). Of course, speculators may trade with other speculators as well as with hedgers. In most financial derivatives markets, the value of speculative trading is far higher than the value of true hedge trading. As well as outright speculation, derivatives traders may also look for arbitrage opportunities between different derivatives on identical or closely related underlying securities. Broadly speaking there are two distinct groups of derivative contracts, which are distinguished by the way that they are traded in market
