derivative instruments

Derivative instruments are financial contracts that derive their value from the performance of an underlying asset, such as stocks, commodities, or currencies. They are used to manage risk, speculate on price movements, or lock in prices for future transactions. Common examples include options and futures. Essentially, they are tools for investors and businesses to hedge against potential losses or take advantage of expected price changes, without necessarily owning the underlying asset. Derivatives are complex and require careful understanding, but fundamentally, they are agreements whose worth depends on the value of something else.