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Hello friends! Let's talk about risk management  in derivatives. What are the risks involved in   derivative products and markets? Fundamentally  derivative products themselves are designed   to manage risk or to hedge risk. However since  these are leveraged products that are frequently   used for speculation as well as Arbitraged  they themselves create lot of risk in the   system and for various parties that deal in the  derivative products. Derivative products are by   nature complex, they require lot of complex risk  calculations and also have specific compliance   requirements. Hence understanding and managing  risk in derivatives itself is very important. Broadly there are five types of risk  involved in trading in derivative   products - #1 price risk #2 operational  risk #3 liquidity risk #4 counter-party risk   and #5 regulatory risk. Now, let's  understand each of these risks in detail. What is price risk? Derivative products derive  their price fr

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