Derivatives are financial instruments that derive their value from an underlying asset. The underlying asset can be equity shares, indices, precious metals, commodities, currencies, bonds, etc. They provide traders and investors with:

• Leverage: They can be highly leveraged, meaning you can control a large position with a relatively small margin. This can amplify both your gains and losses.
• Variety: There are many different types of derivatives, each with its own unique features and risks. Common types include futures, options, forwards, and swaps.
• Use cases: They are used for various purposes, including hedging existing positions, speculating on price movements, and generating income.