Derivatives Trading
Derivatives trading involves buying and selling financial contracts whose value is derived from an underlying asset, such as stocks, bonds, commodities, currencies, or market indices. These instruments, including options, futures, swaps, and forwards, are used for hedging risks, speculating on price movements, or gaining leverage. The practice is central to modern financial markets, enabling participants to manage exposure and enhance portfolio strategies.
Developers should learn derivatives trading when building or maintaining financial technology (fintech) applications, such as trading platforms, risk management systems, or algorithmic trading bots, to ensure accurate modeling and compliance with market regulations. It's essential for roles in quantitative finance, where coding skills are applied to price derivatives, backtest strategies, or simulate market scenarios, particularly in hedge funds, investment banks, or fintech startups.