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Cons: unlimited risks for sellers

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Pros:

Protects against adverse price movements.

Access different asset classes and markets.

Useful for hedging, speculation, and arbitrage strategies.

Cons:

Leverage can magnify losses as well as gains.

The other party may fail to meet obligations.

Some contracts may be difficult to buy or sell quickly.

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It offers high leverage, allowing investors to lock in risks as a hedge or make profits by short selling during a market crash; however, if misjudge the market, that leverage will instantly and drastically magnify losses.

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Pros: it can act as hedging, such as to lock in asset prices today to safeguard the portfolio against future market drops.

Cons: it acts as a leverage. A slight market move can instantly multiply the losses and wipe out the capital.

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Pros:

Can get an investment opportunity with lower costs.

Can be use as an hedging tool.

Cons:

Prices sometimes change rapidly, can’t be predictable.

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Pros: option is more flexible when the market is not stable and to manage the risk

Cons: more risky

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Pros: allow for potential high returns with small upfront investment and a way for hedging n locking in the desired stock price

Cons: unpredictability in stock prices magnify the losses

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pros & cons

Leverage magnifies both gains and loss

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The advantage is that it's relatively cheap. For example, in the previous example, an option only costs 10 dollars. The downside is that leverage effects can amplify losses

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Pros:

1.Hedging—Used to protect against price drops.

2.Lower transaction costs than buying the underlying asset directly.

cons:

1.Leverage works both ways, losses can exceed your initial investment, even leading to debt.

2.Some derivatives may be difficult to sell quickly without large price concessions.

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for call option

Pros: High leverage with limited capital; Maximum loss is limited to the premium paid; Potential for significant gains if the asset price rises.

Cons: Subject to time decay; May expire worthless; Requires the asset price to rise sufficiently before expiration.

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Pros

Derivatives can be used to profit from rising prices, falling prices, sideways markets, volatility changes, interest-rate moves, currency moves, or commodity-price changes.

Cons

Options can lose value as expiration approaches, even if the underlying asset moves only slightly or not at all. This makes timing much more important than with ordinary stock investing.

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Pros: Can hedge risks and protect investors from losses and provides leverage, allowing higher potential returns with less capital.

Cons: High risk due to leverage and complex products and may cause large losses.

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Pros:

1. Powerful leverage to amplify returns with low initial capital

2. Hedge against market volatility and limit downside risk.

Cons:

1. Rapid, unlimited losses if the market moves against you

2. The pricing often relies on difficult calculation for retail investor

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Pros:

Easier to control a massive market position with just a small amount of money upfront.

You can use them to protect your existing portfolio from market drops.

Flexibility.

Con’s:

That same leverage means you can lose your entire investment.

They are highly complex and can be confusing for retail investors.

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Pros

Derivatives offer leverage, hedging, and price discovery, but carry high risk, complexity, and potential unlimited losses.

Cons

Need to use cautiously, and it is great for speculation or protection, not for inexperienced investors.

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pros: hedge to protect portfolio, can sell (covered calls) to collect premiums.

cons: magnified risk (you can lose big which exceeds your initial investment), complex to navigate and have strict expiration dates.

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Pros of derivatives investing: Some can lock in future prices to avoid price volatility.

Cons: High leverage risk and high complexity.

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Pros: 1. Additional tool to gain extra profits; 2. Available profits are not only limited to the change of stock price, investors can be more active in investing Cons: 1. While investors may gain more, they suffer higher risk at the same time

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Pros : allow hedging

Cons: become worthless if the price move in expected direction

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Derivatives have several advantages. They can be used to hedge risk, such as protecting a stock portfolio from losses. They also provide leverage, meaning investors can control a larger position with less money. In addition, derivatives allow for flexible strategies, including profiting from rising, falling, or sideways markets, and they can give access to markets like commodities, currencies, interest rates, and indexes.

However, derivatives are risky. Leverage can magnify losses, and some products may trigger margin calls if the position moves against the investor. They can also be complex because their prices depend on factors such as time, volatility, and interest rates. Overall, derivatives are useful for hedging and advanced strategies, but they are not ideal for beginners who do not fully understand the risks.

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Pros

1. High leverage with low upfront capital

2. Hedge asset price risks

3. Profit from falling/rising markets

4. Low transaction costs vs physical assets

Cons

1. High leverage magnifies losses

2. Complex pricing & counterparty risk

3. Expiry leads to total loss possible

4. Volatile & speculative risks

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Pros:hedging risk.companies use futures to lock in exchange rates or commodity prices.

Cons:Prices can change rapidly and unpredictably.

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Pros: earn more money in a short period.

Cons: lose more money in a short period of time.

Gamble. Risky lovers’ game. If have better analytical skills and tools, can help increase the probability dramatically. Need very good mindset.

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Derivatives enable leveraged trading and risk hedging, yet high leverage and expiry features amplify investment risks greatly.

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Pros: hedge against risk, eg I can get oil at a certain set price regardless of inflation.

Cons: in unforeseen situations eg disasters or closure of Strait of Hormuz, I can’t even get my oil at that price cause I won’t even get my oil at all.

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Pros: Can be used for hedging and getting leverage

Cons:

lost in premium if stock moves favourably

Time limited, options are not exercised at the time, the option loses value

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The option allows the investor to participate in the upside potential of a stock (e.g. stock option is cheaper than the actual stock itself). However, since the intrinsic value of the stock depends on 1) the price of the underlying asset and 2) the option terms, the value of the option could be more volatile than the underlying asset.

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Derivatives can be useful investment tools, but they also carry high risks.

1. They help investors hedge risks, improve portfolio flexibility, and gain exposure with lower initial capital.

2. However, derivatives can also magnify losses because of leverage, and they may be difficult to understand or value correctly.

3. They are suitable only for investors who clearly understand the product and can manage the risk.

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i think that its a safer way to invest because theres the ability to limit risks by sacrificing potential gains

downside is that theres a potential that market value does not go above/below your options, if you have one OR the other, and the market is not working in your favour, then the gains is just fixed

but pros is there could be a potential to gain if youre lucky..

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Pros : When you make losses you have a “cushion” who can protect or minimise your loss

Cons: You have to make sure to collect adequate market information before hedging as making profits will make you “lose” the “cushion”