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Investors can protect their portfolios from adverse price movements by using derivatives. This helps reduce potential losses during periods of market volatility.
Derivatives markets reflect investor expectations about future prices, contributing to more efficient and transparent price discovery.
The availability of derivatives attracts a wider range of participants, increasing trading activity and liquidity across the capital market.
Investors can implement diverse trading and investment strategies, including hedging, arbitrage, and portfolio optimization, allowing them to better manage market opportunities and risks.