Some believe derivatives lead to market volatility because enormous amounts of
money are controlled by relatively small amounts of margin or option premiums. The
job of a derivatives trader is something like a bookie taking bets on how people will bet.
Arbitrage is defined as attempting to profit by exploiting price differences of identical
or similar financial instruments, on different markets, or in different forms. As a result,
derivatives can suffer large losses or returns from small movements in the underlying
asset’s price. Investors are like gamblers in that they can bet for or against the price (going
up or down) and can consequently lose or win large amounts.