It refers to a financial instrument whose price is determined by changes in the value of the underlying asset using traditional financial instruments such as stocks and bonds as underlying assets. Typical derivatives include forward trading, futures, options, swaps, etc.
Due to its high leverage, derivatives are highly speculative
1. Derivatives have maturities.
2. High leverage.
3. It's a zero-sum game: In the case of the stock market, many profit during periods of rising stock prices. Many lose money during the period when stock prices fall.
But derivatives, whether their stock price goes up or down, some gain, others lose that much