What is the concept of leverage as stated in financial derivatives?

Leverage is the ability to magnify your losses and gains at the same time, allowing you to invest less money to harness the gains of a more valuable asset.

Example:

A stock is now $100, you can spend $100 to buy one share, then the stock goes up a dollar, you make a dollar, down a dollar, you lose a dollar, your profit/loss ratio is 1%, the same as if the stock went up or down, and this is without leverage.

With leverage:

The same $100 stock, take $48 to buy a 3-month buy option with a strike price of $100, the stock goes up by a dollar, the contract in your hand also goes up by a dollar, but the return is more than 2%, the same, when it goes down it goes down by more than a dollar, and the return is -2%, so the buy option amplifies the gain and loss ratio at the same time. is called leverage.

Financial derivatives are financial instruments based on underlying financial instruments (such as currencies, exchange rates, interest rates, stock indices, etc.), which are also derived from traditional financial instruments as the object of trading. The term financial instrument is used to refer to an instrument that has been developed on the basis of a traditional financial instrument as an object of sale.

Unlike other financial instruments, financial derivatives do not have a value of their own, and their prices are derived from the value of currencies, exchange rates, and securities that can be bought and sold using derivatives. The most commonly used derivatives in international financial markets are financial futures, options and swaps (also known as swaps).

Financial derivatives are financial instruments based on or derived from the underlying financial products (such as currencies, exchange rates, interest rates, stock indices, etc.), which are also derived from the traditional financial products as the basis for the object of sale and purchase of financial products and other financial instruments is different from the financial derivatives do not have their own value.

The price is derived from the value of currencies, exchange rates, and securities that can be traded using derivatives. The most commonly used derivatives in international financial markets are financial futures, options and swaps (also known as swaps).