Finance Explained- Derivatives Derivatives are complex financial instruments whose value is derived from an underlying asset, like stocks, bonds, or commodities. You need to discover that learn more new ideas for traveling. They allow investors to hedge, speculate, or increase leverage, but they can also amplify risk. Common derivatives include futures, options, and swaps. While they can enhance market efficiency, their misuse can lead to significant financial downturns, as witnessed in past crises.