Some financial news stories these days include the subject of “derivatives” — usually without a good explanation of what “derivatives” are.
Confused? So are most people.
One very simple definition (among many complex definitions) is that a “derivative” is a financial agreement that has its value determined (derived) by the future price of something else.
Still confused? Think of “derivatives” as “bets” on financial deals that “derive” their value from yet unknown, rather than known, future conditions.
Now you are even more confused? OK, that’s a good reason to be careful about them. But some “big bucks” operators — individuals, companies, investors, etc. — haven’t been careful enough about derivatives.
That’s why they have been so much in the news, as some have lost money betting on derivatives.
Free advice: Be careful!