What is a Derivative?

Everything you need to know about derivatives: types, strategies, and risk management.

👋 everyone,

OK, so I’ll admit I’ve been hibernating a little longer than anticipated this winter and this is my first post of the year so apologies for that. But… now I’m back with a regular cadence and I’m starting off with a bang in terms of financial concepts that leave folks bewildered:

Derivatives.

If you’re new to the world of finance, I totally appreciate if you just shuddered when you read that word and thought ‘no thanks, not for me’.

But hang on for a moment and let me explain. There’s a few potential pros as a regular everyday investor (or would-be investor) to knowing about the ins and outs of derivatives, so let’s dive in and I promise you it’s not as tedious as you may think.

Today I'll cover:

• What are derivatives? A quick explanation ⚡

• Why do derivatives exist?

• 🧠Common strategies 

• Derivative risks and considerations

• 📹 explanation

• An example of derivatives in action

• Key terminology you need to know

• 🛠️ Useful tools for further exploration