In short, derivatives are contracts where a buyer and a seller trade an underlying asset.
A derivative doesn’t hold inherent value, instead it derives (hence the name) its value from the underlying asset.
Derivative is also a blanket term for financial instrument such as futures, perpetuals and options.
If you invest in, I don’t know, Guinness beer derivatives (they don’t exist, but they should), the value of your derivative will depend on the market value of a gallon of Guinness.
So yeah, it should be pretty high. In my book, at least.
This article was crossposted on Publish0x.
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