Derivatives

Derivatives are financial instruments whose value is derived from an underlying asset, such as stocks, bonds, commodities, currencies, interest rates, or market indices. They are used for hedging risks, speculating on price movements, and gaining leverage in financial markets. Common types include futures, options, swaps, and forwards.

Also known as: Derivative instruments, Derivative contracts, Financial derivatives, Derivs, Deriv

Why learn Derivatives?

Developers should learn about derivatives when working in fintech, quantitative finance, or algorithmic trading systems, as they are essential for building risk management tools, pricing models, and automated trading platforms. Understanding derivatives helps in developing applications for hedging strategies, derivative pricing (e.g., using Black-Scholes models), and compliance with financial regulations.

Learning Resources

• docs: Investopedia: Derivatives
• course: Coursera: Financial Engineering and Risk Management
• tutorial: Khan Academy: Derivatives (Finance)
• book: Book: Options, Futures, and Other Derivatives by John C. Hull
• video: YouTube: Introduction to Derivatives (Finance)