Derivatives

 In finance, derivatives are contracts that derive their value from an underlying asset (like a stock, bond, or currency). Imagine them as financial bets based on something else. They can be used to hedge risk (protect against price changes) or to speculate on future price movements. Common types include options (giving the right, but not obligation, to buy or sell an asset at a certain price) and futures contracts (locking in a price for buying or selling an asset at a future date). Derivatives can be complex and risky, so it’s important to understand them before using them.