What are derivatives in the world of finance. i just googled it but the definition confused me!?

Question

i need a simple explanation. best answer gets 10 points

Answer 1

A derivative is a financial product based indirectly on other products, including commodities, shares, interest or exchange rates.. e.g:

An option is the right to buy/sell an asset at a specified price (exercise price) at a specified period.

A future is the obligation to buy/sell at the specified price on a specified date.

There are others such as Forward contracts and warrants, but these are all derivatives, which themselves have a value and can be traded.

I can go into a lot more detail - but things might get clearer if you have a good background knowledge of financial products such as shares and commodities and stock markets in general.

PS: I found a good website which will sort of explain what derivatives or options are: