Y Derivatives??

Previous article : Derivative basics

Derivative products initially emerged as hedging devices against fluctuations in commodity prices.

But we will talk about use of Derivatives in Equity Market….

Use of Derivatives

Hedging
Making an investment to reduce the risk of adverse price movements on your Portfolio.
A perfect hedge reduces your risk to nothing.
--Is done by the People who are not confident enough on the choice of there investment.

Speculation
The process of selecting investments with higher risk in order to profit from an anticipated price movement.
They call it a form of Gambling.
--The way for making or losing a lot of money

Arbitrage
The simultaneous purchase and sale of a Stock/Security/Contract in order to profit from a difference in the price. This usually takes place on different exchanges or marketplaces.
--I am still not able to find a real time direction to profit from this.

Out of the Above three I mostly indulge in Speculative trading and very rarely in Hedging.
And Speculation to me is Intuition, News, Market whispers and Mahitosh's Tips :D

Previous article : Derivative basics

Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.
--Warren Buffet