Chapter 4

Assets 102: ETFs, Cryptocurrency, Options, and Derivatives

IN THIS CHAPTER

Bullet Expanding the pool of trading tools

Bullet Trading sector trends with ETFs

Bullet Inventing opportunities from invented money

Bullet Deriving profits from derivatives

Bullet Arbitraging your way to new opportunities

The basic financial assets — stocks, bonds, cash, and commodities — do a pretty good job of creating opportunities for people to hedge and speculate, but they have some limitations. The basic assets are just that: they’re securities that represent ownership in a business, a loan to a government or corporation, raw materials, or cold hard cash. They are nice, concrete, easy.

But they aren’t perfect. Nothing is, right? Some people wanted other ways to trade these assets, or parts of these assets, or hedge themselves against the financial risks that come with owning the underlying asset. The result of research, market demand, and more than a little financial engineering come the alternatives that I cover in this chapter. ...

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