Derivative Product (Derivative)

A financial instrument whose value depends on or is linked to the price of another asset called the underlying asset. Underlying assets can be stocks, bonds, indices, currencies, commodities, or other financial instruments. Derivatives are commonly used for risk hedging, speculation, or access to markets and assets otherwise difficult to reach. Common derivative products include forwards, futures, options, and swaps. Trading derivatives is usually associated with higher risk, which is why it is regulated and requires professional management.