Derivatives is a product whose value is derived from the value of an underlying asset, index or reference rate. The underlying asset can be equity, forex, commodity or any other asset

Let’s look at some benefits derivatives offers that makes them so popular:

Derivatives offer the benefit of leverage which means large exposure can be carried out by paying only a margin of the total amount.

By using derivative, you can mitigate the price risk.  It helps to hedge cash market investments.   Hedging is very useful especially ahead of any major events like elections.

Derivative trading helps transfer of market risk from risk-averse investors to those with an appetite for risk. 

Traders can get the benefit of liquidity as these contracts are generally more liquid.

Derivatives make market more efficient through helping in price discovery.

Derivatives have low transaction costs as compared to cash markets making them an attractive for traders.

—  All famous and successful investors use derivatives either to bring down portfolio's risk level or give it a much needed boost!

—  However, Derivatives are double edged sword.  One should not use/invest in them without understanding them completely.

So if you have the knowledge and risk appetite, trading in derivatives should be a preferred option.