Symbol instruments are traded on exchanges, just like stocks and bonds. However, unlike stocks and bonds, which represent ownership in a company or government, symbol instruments do not give the holder any ownership rights in the underlying asset. Instead, symbol instruments allow investors to speculate on the price movements of the underlying asset without having to buy or sell the asset itself.
There are two main types of symbol instruments: futures and options. Futures contracts are agreements to buy or sell an underlying asset at a specified price on a specified date. Options contracts give the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.
Symbol instruments can be used for a variety of purposes, including hedging, speculating, and income generation. Hedging is a strategy used to reduce risk by taking a position in an opposite direction to an existing position. Speculating is betting on the future price movements of an asset in the hope of making a profit. Income generation involves using symbol instruments to generate a steady stream of income.
Symbol instruments can be complex and risky financial instruments. It is important to understand how they work before trading them.