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Why trade derivatives?

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Why trade derivatives?

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A stock derivative such as an option can be traded “long” or “short”, that is on a rising or falling share price trend, or a combination. Derivatives are also a leveraged instrument, which allows a small Capital outlay to control a large parcel of shares for similar profits. This Capital efficiency allows the trading strategy to be spread over more trades of equities. Both these advantages greatly increase the potential profitability while decreasing risk.

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