Johdannaisista

Johdannaisista, often translated as derivatives, are financial contracts whose value is derived from an underlying asset, group of assets, or benchmark. This underlying asset can be a stock, bond, commodity, currency, interest rate, or market index. Derivatives are primarily used for hedging, speculation, and arbitrage.

Hedging involves using derivatives to reduce or eliminate the risk associated with price fluctuations of an underlying asset. For example, a farmer might use a futures contract to lock in a price for their crop, protecting them from a potential drop in market prices. Speculation, on the other hand, involves taking on risk in the hope of profiting from future price movements. Traders might buy a call option if they believe the price of a stock will rise. Arbitrage is the simultaneous buying and selling of an asset in different markets to profit from tiny differences in the asset's listed price.

The most common types of derivatives include futures, forwards, options, and swaps. Futures and forwards are agreements to buy or sell an asset at a predetermined price on a future date. Options give the buyer the right, but not the obligation, to buy or sell an asset at a specific price within a certain timeframe. Swaps involve exchanging cash flows between two parties based on different financial instruments. The over-the-counter (OTC) market and organized exchanges are the primary venues for trading derivatives.