Individuals and organizations may likewise try to find arbitrage opportunities, as when the existing purchasing rate of a property falls listed below the cost specified in a futures agreement to sell the possession. Speculative trading in derivatives gained a fantastic offer of notoriety in 1995 when Nick Leeson, a trader at Barings Bank, made poor and unauthorized financial investments in futures contracts.The real proportion of derivatives contracts utilized for hedging purposes is unidentified, however it seems reasonably small. Likewise, derivatives contracts represent only 36% of the median firms' total currency and rates of interest exposure. Nevertheless, we understand that many companies' derivatives activities have at least some speculative element for a variety of reasons.