The best Side of nicotine salts vape

Vaping has gained tremendous popularity in recent years, and with the rise in demand, the market has witnessed an influx of vaping devices. One essential component of any vaping setup is the vape tank. A vape tank houses the e-liquid and atomizer, making it a critical factor in delivering a satisfying vaping experience. This comprehensive guide will delve into the world of premium vape tanks, exploring their features, benefits, and key considerations for choosing the perfect one.

Understanding Vape Tanks:

A vape tank is essentially the reservoir for your e-liquid and houses the atomizer, which is responsible for heating the e-liquid and producing vapor. Premium vape tanks are designed with superior craftsmanship and innovative features, aiming to enhance flavor production, vapor production, and overall performance.

Key Features of Premium Vape Tanks:

Construction Materials:

Premium vape tanks are often constructed using high-quality materials like stainless steel, pyrex glass, and resin. These materials offer durability, heat resistance, and an aesthetically pleasing appearance.

Coil Technology:

High-end vape tanks employ advanced coil technology such as mesh coils or ceramic coils. Mesh coils provide a larger surface area for better heat distribution, resulting in improved flavor and vapor production. Ceramic coils offer longevity, consistent heating, and can handle higher temperatures.

Airflow Control:

Most premium vape tanks feature adjustable airflow control, allowing users to fine-tune their vaping experience. This feature enables customization, ranging from a tighter draw for mouth-to-lung (MTL) vaping to a more airy draw for direct lung (DL) vaping.

E-Liquid Capacity:

Premium vape tanks often offer larger e-liquid capacities, reducing the need for frequent refills. This feature is especially beneficial for vapers who prefer long vaping sessions without interruption.

Top-Fill Design:

Many high-end vape tanks feature a convenient top-fill design, making the refilling process quick and hassle-free. This eliminates the need to disassemble the tank from the device, resulting in a cleaner and more convenient experience.

Benefits of Premium Vape Tanks:

Enhanced Flavor Production:

Premium vape tanks are designed to deliver exceptional flavor. The advanced coil technology, coupled with efficient wicking systems, ensures that the e-liquid's flavor notes are preserved and pronounced.

Increased Vapor Production:

With the utilization of cutting-edge coil technology, premium vape tanks excel in generating thick, dense vapor clouds. This feature is highly desirable for cloud chasers and enthusiasts who enjoy an immersive vaping experience.

Durability and Longevity:

Premium vape tanks are built to last, utilizing high-quality materials and precision engineering. They are less prone to leakage, corrosion, and other common issues that can affect the longevity of a tank, ensuring a more reliable and enjoyable vaping experience.

Customization and Versatility:

Many premium vape tanks offer various coil options, catering to different vaping styles and preferences. Whether you enjoy MTL vaping, DL vaping, or a hybrid style, you can find a tank that suits your needs.

Choosing the Right Premium Vape Tank:

Consider Your Vaping Style:

Determine whether you prefer MTL or DL vaping. MTL tanks provide a tighter draw and are suitable for those transitioning from traditional cigarettes, while DL tanks offer a more open draw for direct lung inhales and cloud chasing.

Coil Compatibility:

Ensure that the premium vape tank you choose has a wide range of compatible coils available. This provides flexibility and allows you to experiment with different coil types, vape mod pod kit materials, and resistance levels.

Research User Reviews:

Before purchasing a premium vape tank, read reviews from reputable sources or seek advice from experienced vapers. User feedback can offer valuable insights into the tank's performance, flavor delivery, and overall user experience.

Price and Budget:

Premium vape tanks often come with a higher price tag due to their superior build quality and features. Set a budget and consider the long-term value and durability of the tank before making a purchase.

Conclusion:

Investing in a premium vape tank can significantly elevate your vaping experience, offering enhanced flavor, increased vapor production, and durability. By understanding the key features, benefits, and factors to consider, you can make an informed decision when choosing the perfect premium vape tank that caters to your vaping style and preferences. Remember, a premium vape tank is an investment in your enjoyment and satisfaction, so choose wisely and enjoy the world of flavorful and satisfying vapor.

5 Easy Facts About lemon haze seed Described



Amnesia Lemon is a strain that perfectly embodies the marriage of two renowned strains - Amnesia Haze and Lemon Skunk. This sativa-dominant hybrid offers a unique and potent combination of flavors, aromas, and effects. Known for its uplifting and energizing qualities, Amnesia Lemon has gained popularity among cannabis enthusiasts worldwide. In this guide, we will delve into the origins, characteristics, cultivation tips, and effects of Amnesia Lemon, providing you with a comprehensive understanding of this exceptional strain.

Origins and Genetics:

Amnesia Lemon is the result of crossbreeding two legendary strains, Amnesia Haze and Lemon Skunk. Amnesia Haze, a sativa-dominant hybrid, is renowned for its powerful cerebral effects and citrusy aroma. On the other hand, Lemon Skunk brings its distinct lemony scent and uplifting qualities to the genetic mix. The combination of these two strains resulted in the creation of Amnesia Lemon, which beautifully captures the best of both worlds.

Appearance and Aroma:

Amnesia Lemon plants typically display dense, elongated buds with a vibrant green color. These resinous buds are generously coated in trichomes, giving them a frosty and glistening appearance. The strain's name is indicative of its aroma, as it exudes a strong and unmistakable lemon scent. The fragrance is often accompanied by earthy undertones, which add depth to the overall olfactory experience. Breaking open a bud releases an intense burst of citrus that can be invigorating and refreshing.

Flavors and Taste Profile:

When it comes to flavors, Amnesia Lemon lives up to its name. The strain offers a delightful combination of zesty lemon and tangy citrus notes that tantalize the taste buds. This refreshing profile is complemented by hints of sweet and earthy undertones, creating a well-rounded and enjoyable flavor experience. The taste is often described as smooth and balanced, making it a favorite among cannabis connoisseurs who appreciate a harmonious blend of citrusy goodness.

Cultivation Tips:

Amnesia Lemon can be grown both indoors and outdoors, although it thrives particularly well in indoor environments where environmental factors can be more easily controlled. When cultivating this strain, it's crucial to provide a favorable growing environment to achieve optimal results. Here are some cultivation tips to consider:

Climate and Temperature: Amnesia Lemon prefers a mild and Mediterranean-like climate with temperatures ranging between 68-80°F (20-27°C) during the vegetative stage. Keep humidity levels in check, aiming for around 40-50% to prevent mold and mildew growth.

Lighting and Indoor Setup: If growing indoors, provide a consistent light cycle of 18-20 hours of light during the vegetative stage, followed by 12 hours of uninterrupted darkness during the flowering stage. High-intensity discharge (HID) lights or LED grow lights are commonly used for indoor cultivation.

Nutrients and Feeding: Ensure a balanced nutrient regimen throughout the different growth stages, including a higher nitrogen content during vegetative growth and a shift towards phosphorus and potassium during flowering. Regularly monitor pH levels and adjust nutrient solutions accordingly.

Training and Pruning: Employ training techniques such as topping, pruning, and low-stress training (LST) to manage the plant's height, enhance light penetration, and promote even bud development. This helps maximize yields and maintain a manageable canopy.

Harvesting and Drying: Harvest Amnesia Lemon when the trichomes are milky white with some amber hues. After carefully trimming the buds, hang them in a dark and well-ventilated area with controlled humidity levels (around 45-55%) to dry slowly. Proper drying and curing are essential for preserving the strain's flavors and potency.

Effects and Medicinal Benefits:

Amnesia Lemon's effects are predominantly cerebral and uplifting, making it a popular choice for daytime use or social occasions. The high sets in quickly, inducing a sense of euphoria and mental stimulation. Users auto critical orange punch often report heightened focus, creativity, and an energetic boost that can be conducive to productivity and social interactions.

In addition to its recreational effects, Amnesia Lemon may offer medicinal benefits to certain individuals. The strain's uplifting nature can potentially help with mood disorders such as depression or chronic stress. Some users have also reported relief from mild pain and headaches, although individual experiences may vary.

Precautions and Side Effects:

As with any cannabis strain, it's important to consume Amnesia Lemon responsibly and be aware of potential side effects. Common side effects associated with cannabis use include dry mouth and eyes, dizziness, and increased heart rate. Inexperienced users or those sensitive to THC may also experience anxiety or paranoia if consumed in large quantities.

Moreover, it's essential to be mindful of dosage and personal tolerance. The high THC content in Amnesia Lemon can be potent, and novice users should start with small doses to gauge their reaction and gradually increase as needed.

Conclusion:

Amnesia Lemon is a remarkable cannabis strain that offers a unique combination of effects and flavors. With its potent citrus aroma, tangy taste, and balanced high, it has gained a loyal following among cannabis enthusiasts. Whether you're seeking a strain for socializing, creative pursuits, or potential therapeutic benefits, Amnesia Lemon is definitely worth exploring. Just remember to cultivate responsibly, and enjoy this strain responsibly in compliance with local laws and regulations.

The handkerchiefs Diaries

When it comes to men's fashion, accessories play a significant role in creating a polished and stylish look. One accessory that can add a touch of sophistication and elegance to any outfit is the extra long tie. Extra long ties are perfect for tall individuals or those who prefer a more modern and trendy look. In this guide, we will explore everything you need to know about extra long ties, including their benefits, how to choose the right length, styling tips, and more.

Benefits of Extra Long Ties:

Extra long ties offer several advantages over their standard-length counterparts. Firstly, they are designed specifically for taller individuals, ensuring that the tie hangs at an appropriate length. This prevents the tie from looking too short or awkwardly proportioned when worn. Additionally, extra long ties provide a sleek and modern aesthetic that can enhance any outfit. They offer a unique opportunity for self-expression and can add an element of personality to your ensemble. Whether you're attending a formal event or heading to the office, an extra long tie can elevate your overall look.

Choosing the Right Length:

Selecting the correct length for your extra long tie is crucial to ensure a proper fit and a polished appearance. As a general guideline, the tip of the tie should reach just above your waistband or belt buckle. This length provides a balanced and proportional look, regardless of your height. To determine the ideal length for you, it's recommended to try on different sizes and experiment with various lengths in front of a mirror. Remember that everyone's body proportions are unique, so what works for one person may not work for another.

Materials and Patterns:

Extra long ties come in a wide range of materials and patterns, allowing you to choose the one that best complements your style and occasion. Common materials for ties include silk, polyester, cotton, and wool. Silk ties are a popular choice due to their luxurious feel and elegant drape. Polyester ties offer durability and are often more affordable. Cotton and wool ties are great options for colder seasons as they provide warmth and texture. When it comes to patterns, classic choices include solid colors, stripes, and polka dots. However, don't be afraid to experiment with more daring patterns and prints to showcase your individuality.

Styling Tips:

Now that you have your extra long tie, let's explore some styling tips to help you make the most of this fashionable accessory:

Suit and Shirt Pairing:

When wearing an extra long tie, it's essential to consider the color and pattern of your suit and shirt. Opt for complementary or contrasting colors to create visual interest. For example, pair a navy blue suit with a light blue shirt and a red extra long tie for a sophisticated look.

Knot Selection:

The type of knot you choose can significantly impact the appearance of your tie. A full Windsor knot or a half Windsor knot works well with extra long ties, as they create a larger knot that complements the length. Experiment with different knot styles to find the one that suits your personal style and the thickness of your tie.

Proper Length Adjustment:

Adjusting the length of your tie is crucial for a neat and professional appearance. Make sure the tip of the tie falls at the correct length, just above your waistband or belt buckle. Avoid letting the tie hang too low or too high, as it can disrupt the balance of your outfit.

Tie Bar or Tie Pin:

Consider using a tie bar or tie pin to keep your extra long tie in place. These accessories not only add a touch of sophistication but also prevent your tie from swinging or getting in your way during the day. Choose a tie bar or pin that complements the overall look of your outfit.

Experiment with Textures:

Extra long ties provide an excellent opportunity to experiment with different textures. Consider pairing a textured tie with a smooth shirt or vice versa to add depth and visual interest to your ensemble. Mix and match textures to create a visually appealing outfit.

Care wedding ties and Maintenance:

To keep your extra long tie looking its best, proper care and maintenance are essential. Here are some tips to ensure your tie remains in excellent condition:

Untie with Care:

When removing your tie, always untie it gently to avoid damaging the fabric. Pulling on the narrow end of the tie can cause wrinkles, creases, or even permanent damage.

Spot Cleaning:

If you spill something on your tie, it's crucial to act quickly. Use a clean cloth or paper towel to blot the stain gently. Avoid rubbing the fabric, as it can spread the stain or damage the tie. For stubborn stains, consider taking your tie to a professional cleaner.

Storage:

Proper storage is vital to prevent your extra long tie from becoming wrinkled or damaged. Hang your ties on a tie rack or roll them loosely and store them in a tie case. Avoid folding them tightly, as it can leave creases that are difficult to remove.

Steaming:

If your tie becomes wrinkled, use a handheld steamer to gently remove the wrinkles. Hold the steamer a few inches away from the tie and allow the steam to relax the fabric. Avoid pressing the steamer directly onto the tie, as it can damage the material.

Conclusion:

Extra long ties are a stylish and practical accessory for tall individuals or those who prefer a contemporary look. By choosing the right length, experimenting with materials and patterns, and following the styling tips provided, you can create a polished and sophisticated outfit. Remember to care for your extra long ties properly to maintain their quality and longevity. With this guide in hand, you'll be well-equipped to incorporate extra long ties into your wardrobe and elevate your style to new heights.

The Single Best Strategy To Use For hats





T-shirts are a timeless and versatile wardrobe staple that can be found in everyone's closet. Whether you're looking for a casual everyday outfit or something to express your personal style, a well-fitting and carefully chosen t-shirt can make all the difference. In this comprehensive guide, we will explore the different styles, fits, and materials available in t-shirts, along with valuable tips on how to care for them. By the end, you'll be equipped with all the knowledge you need to make informed choices when it comes to selecting, wearing, and maintaining your t-shirt collection.

I. Understanding T-Shirt Styles:

T-shirts come in various styles, each offering unique features and designs. Here are some popular styles you should be familiar with:

Crew Neck: The crew neck is a classic and versatile t-shirt style that features a rounded neckline. It's suitable for most body types and can be easily dressed up or down.

V-Neck: V-neck t-shirts have a V-shaped neckline that elongates the neck and adds a touch of sophistication to your look. They work well for those with broader shoulders or round faces.

Henley: Henley t-shirts feature a buttoned placket and a collarless neckline, creating a casual yet stylish look. They're great for layering or achieving a more laid-back appearance.

Raglan: Raglan sleeve t-shirts have a diagonal seam that extends from the collar to the underarm. This style provides a sporty and athletic aesthetic, making it perfect for active wear.

Polo: Polo shirts are a slightly dressier version of t-shirts. They have a collar and buttoned placket, giving them a more refined and preppy look.

II. Choosing the Right Fit:

Selecting the right fit is crucial for both comfort and style. Here are the main t-shirt fits you'll encounter:

Regular Fit: Regular fit t-shirts have a relaxed cut and offer a comfortable, loose feel. They're suitable for most body types and provide a classic casual look.

Slim Fit: Slim fit t-shirts have a narrower cut and hug the body more closely. They provide a more tailored appearance and are ideal for individuals with a slim or athletic build.

Athletic Fit: Athletic fit t-shirts are designed for those with a more muscular build. They offer a wider shoulder and chest area while tapering down towards the waist, creating a flattering silhouette.

Oversized Fit: Oversized t-shirts are currently on-trend and offer a relaxed and effortlessly stylish look. They have a loose, baggy fit and can be paired with skinny jeans or leggings for a balanced outfit.

III. Fabrics and Materials:

The choice of fabric and material plays a significant role in the comfort and durability of your t-shirts. Here are some common fabrics used in t-shirt manufacturing:

Cotton: Cotton is a natural fiber that is breathable, soft, and comfortable. It's the most popular choice for t-shirts due to its versatility and ability to absorb moisture.

Polyester: Polyester is a synthetic fabric that is durable, wrinkle-resistant, and quick-drying. It's often blended with other materials to enhance the t-shirt's durability and stretch.

Blends: T-shirts made from fabric blends, such as cotton-polyester blends, offer the benefits of both materials. They combine the softness and breathability of cotton with the strength and quick-drying properties of polyester.

Organic and Sustainable Materials: For those concerned about the environment, organic cotton, hemp, or bamboo t-shirts are excellent options. These materials are grown without harmful chemicals and are more sustainable in the long run.

T-Shirts:

Proper care and maintenance of your t-shirts will not only prolong their lifespan but also keep them looking fresh and comfortable. Here are some essential tips for t-shirt care:

Washing Instructions: Always check the care label on your t-shirts for specific washing instructions. In general, machine wash your t-shirts in cold water to prevent color fading and shrinkage. Use a mild detergent and avoid using bleach, as it can damage the fabric.

Drying: Air drying is the best option for t-shirts, as it helps maintain their shape and prevents shrinking. If you need to use a dryer, choose a low heat setting to minimize the risk of damage. Avoid over-drying, as it can lead to excessive wrinkling.

Ironing: Most t-shirts don't require ironing, especially if you hang them to dry properly. However, if you prefer a more polished look, use a low to medium heat setting on your iron and iron the t-shirt inside out to avoid direct contact with the print or design.

Stain Removal: Treat stains promptly to prevent them from setting into the fabric. Gently blot the stain with a stain remover or mild detergent before washing. Avoid rubbing vigorously, as it can damage the fabric fibers.

Folding and Storage: Fold your t-shirts neatly to minimize wrinkles. Avoid hanging them for extended periods, as it can stretch the fabric. Store your t-shirts in a cool, dry place away from direct sunlight to prevent color fading.

V. Styling Tips:

Now that you have a solid understanding of t-shirt styles, fits, materials, and care, let's explore some styling tips to elevate your t-shirt game:

Layering: T-shirts are incredibly versatile for layering. Pair a crew neck or V-neck t-shirt with a lightweight jacket or cardigan for a stylish and casual look. Experiment with different color combinations to create visually appealing outfits.

Dressing Up: T-shirts can be dressed up for more formal occasions. Opt for a slim-fit or polo t-shirt and pair it with tailored trousers or a skirt. Add accessories like a blazer, statement necklace, or heels to elevate the look.

Casual Chic: For a relaxed and effortless look, style an oversized t-shirt with high-waisted jeans or shorts. Complete the outfit with sneakers or sandals and accessorize with a hat or sunglasses for a touch of personality.

Graphic Tees: Graphic t-shirts are a great way to showcase your interests, personality, or sense of humor. Pair them with neutral bottoms to let the design jackets stand out or mix patterns and colors for a bold and eclectic look.

Tucked-In or Untucked: Experiment with different tucking styles to create different vibes. Tucking a t-shirt into high-waisted pants or skirts can define the waist and create a polished appearance. Leaving the t-shirt untucked offers a more relaxed and casual vibe.

Conclusion:

T-shirts are a wardrobe staple that offers endless possibilities for personal style and comfort. By understanding the different styles, fits, fabrics, and caring for your t-shirts, you can build a versatile collection that lasts. From casual everyday outfits to dressed-up ensembles, t-shirts can be effortlessly incorporated into a wide range of looks. Remember to embrace your individuality, experiment with different combinations, and have fun expressing yourself through the timeless and versatile t-shirt.

5 Simple Statements About derivative product comics Explained





A financial market refers to a marketplace where various kinds of financial securities such as stocks, bonds, commodities, etc. are traded. The term ‘market’ can also refer to exchanges that are legal organizations that facilitate the trade of financial securities between buyers and sellers. In any case, these markets are categorized based of the type of financial securities that are traded through them. One such financial market is the Derivatives Market.

Derivatives market thus refers to the financial marketplace where derivative instruments such as futures, forwards and options contracts are traded between counterparties.

It was during the 1980s and 1990s that the financial markets saw a major growth in the trade of derivatives. A derivative is a financial instrument whose value is derived from the value of an underlying asset such as stocks, bonds, currencies, commodities, interest rates and/or different market indices. These underlying assets have fluctuating prices and returns, and derivatives provides a means to investors to reduce the risk exposure and leverage profits on these assets. Thus, derivatives are an essential class of financial instruments and central to the modern financial markets providing not just economic benefits but also resilience against risks. The most common derivatives include futures, forwards, options and swap contracts.

As per the European Securities and Markets Authority (ESMA), derivatives market has grown impressively (around 24 percent per year in the last decade) into a truly global market with over €680 trillion of notional amount outstanding. The interest rate derivatives (IRDs) accounted for 82% of the total notional amount outstanding followed by currency derivatives at 11%.

Main types of derivative contracts
Derivatives derive their value from an underlying asset, or simply an ‘underlying’. There is a wide range of financial instruments that can be an underlying for a derivative such as equities or equity index, fixed-income instruments, foreign currencies, commodities, and even other securities. And thus, depending on the underlying, derivative contracts can derive their values from corresponding equity prices, interest rates, foreign exchange rates, prices of commodities and probable credit events. The most common types of derivative contracts are elucidated below:

Forwards and Futures
Forward and futures contracts share a similar feature: they are an agreement between two parties to buy or sell a specified quantity of an underlying asset at a specified price (or ‘exercise price’) on a predetermined date in the future (or ‘expiration date’). While forwards are customized contracts i.e., they can be tailor-made according to the asset being traded, expiry date and price, and traded Over-the-Counter (OTC), futures are standardized contracts traded on centralized exchanges. The party that buys the underlying is said to be taking a long position while the party that sells the asset takes a short position and both parties are obligated to fulfil their part of the contract.

Options
An option contract is a financial derivative that gives its holder the right (but not the obligation) to trade an underlying asset at a price set in advance irrespective of the market price at maturity. When an option is bought, its holder pays a fixed amount to the option writer as cost for this flexibility of trading that the option provides, known as the premium. Options can be of the types: call (right to buy) or put (right to sell).

Swaps
Swaps are agreements between two counterparties to exchange a series of cash payments for a stated period of time. The periodic payments charged can be based on fixed or floating interest rates, depending on contract terms decided by the counterparties. The calculation of these payments is based on an agreed-upon amount, called the notional principal amount (or just notional).

Exchange-traded vs Over-the-counter Derivatives Market
Exchange-traded derivatives markets
Exchange-traded derivatives markets are standardized markets for derivatives trading and follows rules set by the exchange. For instance, the exchange sets the expiry date of the derivatives, the lot-size, underlying securities on which derivatives can be created, settlement process etc. The exchange also performs the clearing and settlement of trades and provide credit guarantee by acting as a counterparty for every trade of derivatives. Thus, exchanges provide a transparent and systematic course of action for any derivatives trade.

Over-the-counter markets
Over-the-counter (also known as “OTC”) derivatives markets on the other hand, provide a lesser degree of regulations. They were almost entirely unregulated before the financial crisis of 2007-2008 (also a time when derivatives markets were criticized, and the blame was placed on Credit Default Swaps). OTCs are customized markets and run by dealers who hedge risks by indulging in derivatives trading.

Types of market participants
The participants in the derivative markets can be categorized into different groups namely,

Hedgers
Hedging is a risk-neutralizing strategy when an investor seeks to protect a current or anticipated position in the market by limiting their risk exposure. They can do so by taking up an offset or counter position through derivative contracts. Parties such as individuals or companies who perform hedging are called Hedgers. The hedger thus aims to eliminate volatility against fluctuating prices of underlying securities and protect herself/himself from any downsides.

Speculators
Speculation is a very common technique used by traders produit dérivé and investors in the derivatives market. It is based on when traders have a strong viewpoint regarding the market behavior of any underlying security and though it is risky, if the viewpoint is correct, the speculation may reward with attractive payoffs. Thus, speculators use derivative contracts with a view to make profit from the subsequent price movements. They do not have any risk to hedge, in fact, they operate at a relatively high-risk level in anticipation of profits and provide liquidity in the market.

Arbitrageurs
Arbitrage is a strategy in which the participant (or arbitrageur) aims to make profits from the price differences which arise in the investments made in the financial markets as a result of mispricing. Arbitrageurs aim to earn low risk profits by taking two different positions in the same or different contracts (across different time periods) or on different exchanges to in-cash on price discrepancies or market inefficiencies.

Margin Traders
Margin is essentially the collateral amount deposited by an investor investing in a financial instrument to the counterparty in order to cover for the credit risk associated with the investment. In margin trading, the trader or investor is not required to pay the total value of your position upfront. Instead, they only need pay the margin amount which may vary and are usually fixed by the stock exchanges considering factors like volatility. Thus, margin traders buy and sell securities over a single session and square off their position on the same day, making a quick payoff if their speculations are right.

Criticism of derivatives
While derivatives provide numerous benefits and have significantly impacted modern finance and markets, they pose many risks too. In a 2002 letter to Berkshire Hathaway shareholders, Warren Buffet even described derivatives as “financial weapons of mass destruction”.

Derivatives are more highly leveraged due to relatively relaxed regulations surrounding them, and where one may need to put up half the money or more with buying other securities, derivatives traders can get by with just putting up a few percentage points of the total value of a derivatives contract as a margin. If the price of the underlying asset keeps falling, covering the margin account can lead to enormous losses. Derivatives are thus often criticized as they may allow investors to obtain unsustainable positions that elevates systematic risk so much that it can be equated to legalized gambling. Derivatives are also exposed to counterparty credit risk wherein there is scope of default on the contract by any of the parties involved in the contract. The risk becomes even greater while trading on OTC markets which are less regulated.

Derivatives have been associated with a number of high-profile credit events over the past two decades. For instance, in the early 1990s, Procter and Gamble Corporation lost more than $100 million in transactions in equity swaps. In 1995, Barings collapsed when one of its traders lost $1.4 billion (more than twice its then capital) in trading equity index derivatives.

The amounts involved with derivatives-related corporate financial distresses in the 2000s increased even more. Two such events were the bankruptcy of Enron Corporation in 2001 and the near collapse of AIG in 2008. The point of commonality among these events was the role of OTC derivative trades. Being an AAA-rated company, AIG was being exempted from posting collateral on most of its derivatives trading in 2008. In addition, AIG was unique among CDS market participants and acted almost exclusively as credit protection seller. When the global financial crisis reached its peak in late 2008, AIG’s CDS portfolios recorded substantial mark-to-market losses. Consequently, the company was asked to post $40 billion worth of collateral and the US government had to introduce a $150 billion financial package to prevent AIG, once the world’s largest insurer by market value, from filing for bankruptcy.

Conclusion
Derivatives were essentially created in response to some fundamental changes in the global financial system. If correctly handled, they help improve the resilience of the system, hedge market risks and bring economic benefits to the users. Thus, they are expected to grow further with financial globalization. However, past credit events have exposed many weaknesses in the organization of their trading. The aim is to minimize the risks associated with such trades while enjoying the benefits they bring to the financial system. An important challenge is to design new rules and regulations to mitigate the risks and to promote transparency by improving the quality and quantity of statistics on derivatives markets.

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