Derivatives do away with the need to invest a large amount of capital upfront and allowing you to benefit from market movements. This is an effective tool to hedge the risk. You can trade in Futures – contracts or an agreement between two parties to either buy or sell a fixed quantity of assets at a particular time in the future for a fixed price OR Options – A similar contract, except the parties are not obligated to fulfill the terms of the agreement. These contracts are then traded in the market.
