mdfb79

Are you referring to the first derivatives item set in Volume 1 of Schweser? Like caps/floors/calls/puts/etc… you’re simply using the aforementioned derivatives to make directional bets or hedges on the underlying interest rates. These are much less confusing than swaptions.
example: i own a floating rate bond indexed to LIBOR. How can i best hedge this? When interest rates rise, in this case LIBOR, I win. I need a derivative that will hedge me if rates fall. We all are acutely aware of the inverse relationship with interest rates and bond prices. My loss exposure is if rates fall so I need to go LONG a futures contract on a LIBOR instrument to hedge my existing position. This position will gain in value in the event of falling rates.
If you’re hedging a LIBOR based security then go with EURODOLLAR futures
If you’re hedging a US rate based security then use T BILL futures