Using Derivatives for Speculation (Futures Vs Options Vs Spot)
1. Context
In this video from FRM Part 1, we explore how speculators differ from hedgers and how the former can use derivatives to monetise their views about market variables. Options and futures, one should remember have embedded leverage in them, i.e. an attribute that magnifies both the rewards as well as the risks. The details of the reading in which this topic appears are given below:
| Area | Financial Markets and Products |
| Reading | Introduction |
| Reference | John C. Hull, Chapter 1. Introduction In Options, Futures, and Other Derivatives, 10th Edition, (New York: Pearson, 2017). |