The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What are derivatives?” Derivatives are probably one of my most favorite topics because most people really don't understand how they work and yet, they’re all around you. You probably used derivatives or you're already in a derivatives contract. You just don't know it yet or maybe it's called something different. But all derivatives are, are financial products or investment products that derive their value from some other asset. And so, basically, if you just break down the word, it's basically deriving value from something else, so a derivative. That's how it kind of comes up and that's the way I always think about it. One of the things that you're probably in right now is a derivatives contract and you don't even know it, is any type of insurance that you have. It could be personal insurance for your life insurance. It could be insurance on your house, on your automobile, o