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Trading in Derivatives

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The derivatives markets have been attacked as "nothing more than well-dressed casino gambling." Please comment whether you think trading in derivatives is simply gambling or whether they serve a valuable purpose.

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Solution Summary

The pros and cons of trading in derivatives are discussed.

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Since there are many different kind of derivative products, I would like to focus the answer on stock options. Please let me know if you would like a different perspectives on other derivatives.

Simply gambling: This is the situation when ...

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