Derivatives have developed a bad reputation over the years, with the horror stories spreading far and wide. Many of us have heard about Long-Term Capital Management, with its highly leveraged trading strategies that failed and nearly collapsed the global financial system in 1998. Many big hedge funds also dabbled in complex derivative structures that were costly and risky to clients, and, in many cases, unsuccessful.
Derivatives have developed a bad reputation over the years, with the horror stories spreading far and wide. Many of us have heard about Long-Term Capital Management, with its highly leveraged trading strategies that failed and nearly collapsed the global financial system in 1998. Many big hedge funds also dabbled in complex derivative structures that were costly and risky to clients, and, in many cases, unsuccessful.