Hi, friends! Imagine this situation. You set up a precious metals shop in your backyard and now you\’re making millions algebraically with gold derivatives. That\’s pretty neat, isn\’t it? But how did we pull that off?

To understand the magic behind these complex financial instruments called derivative tools, let me explain a little bit about stock market shenanigans first. So what is a stock market again? For those who are new to the world of finance, it\’s like an auction house where stocks (pieces of ownership) can be bought or sold.

Now back to our shed-based money-making scheme. We exploited these never-ending trends and fluctuations by creating derivative contracts. These derivatives were then beautifully packaged into various types of asset-backed securities – it was all about being smart with numbers.

Here are some of the most popular derivative tools you should know:

1. Swaps: Yes, swaps! They involve exchanging one agreed-upon stream of payments for another over time. Essentially, if I owe someone $10 next year and they offer me $9 tomorrow instead, but with yields adjusted annually, could I get different earnings compared to paying them just once upfront? Of course!

2. Futures Contract: Think期货合同。 In layman terms, imagine you want to buy apples in bulk at a fixed price sometime in future (let\’s say February). This trade would require both parties to agree on today\’s spot price of apples as well as their selling prices for future deliveries. Now, either party can walk away from the contract should unforeseen circumstances arise (ahem… COVID-19 began back then).

3. Options Contracts:_options 是什么？这个概念有点复杂，但我会尽量简单化它。实质上，如果你有机会在未来任何时候买一辆特斯拉（Tesla），但还不确定是否购买，你可以签订一份期权合约以便未来享受更低的价格。更通俗地说就是 明天一车 在 可能性很低 的情况下奔向整个地球…

哈别笑话哈，我说的是要准备好面对那种可能性很低的事情 – 这一点很重要！It定会影响未来的交易价格.

These aren\’t孤立工具; derivatives often interact and create markets among themselves. Banks use large mountains of interrelated contracts to hedge against different risks involved in borrowing funds by bundling their assets. It’s like wearing a suit jacket made out of cashmere春夏秋冬四季适用覆盖面很广！

As long as you stay curious, there will always be new ways to cut costs and increase profits through swish-wazzles like derivative trading dialed up to the highest level.

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