Derivatives, which were originally introduced as financial instruments to hedge financial risk, are now increasingly used for speculative purposes as well. The diverse uses of derivatives arise from the skewing effect that options strategies have on the returns distribution of portfolios. In...

At the heart of the Capital Asset Pricing Model (CAPM) lies the concept of systematic risk. The systematic risk of a security is that component of the total risk of the security that is explained by market risk. This is captured through the regression of security returns on market returns. The...