THEME 07 · ADVANCED

The speculative edge: crypto, leverage and derivatives

Instruments that can lose more than you put in, and instruments with nothing behind them. What each one is, mechanically, and exactly how it goes wrong. — 11 lessons · 44 terms

The lessons

  1. 7.1

    What a derivative is

    A contract whose value comes from something else. That's the whole idea.

  2. 7.2

    Options: calls, puts, and what the buyer owns

    A right, not an obligation — and a ticking clock.

  3. 7.3

    What writing an option obliges you to do

    The other side of the contract, where the losses aren't capped.

  4. 7.4

    CFDs and spread betting in the UK

    What the product is, and what the required risk warning is actually telling you.

  5. 7.5

    Margin and leverage: how losses multiply

    Borrowing to invest, and the mechanics of a margin call.

  6. 7.6

    Leveraged and inverse ETFs, and why they decay

    Designed to track one day. Held for a year, they do something else entirely.

  7. 7.7

    Short selling: borrowing what you don't own

    Profiting from a fall, with a loss that has no ceiling.

  8. 7.8

    Crypto: what a token is, and what stands behind it

    No earnings, no issuer obligation, no cash flow. What's left.

  9. 7.9

    Crypto custody, exchanges, and what isn't protected

    Who holds the keys, and what happens when the exchange doesn't.

  10. 7.10

    Stablecoins, staking and "yield"

    Why the word yield here means something different from a dividend yield.

  11. 7.11

    Why the FCA restricts some of these products

    The rules, and the reasoning behind them.

Educational content only. It is not personal financial advice.