A derivative contract allows a transfer of risks that is beneficial to both parties in the contract.

Speculators use derivative contracts traded on exchanges, while hedgers use contracts traded in over-the-counter markets.

Complex derivatives created with mortgages by banks in the years leading up to the 2007 - 2009 global financial crisis limited demand for housing and reduced the severity of the crisis.

Derivative contracts such as forwards, futures, or options have linear payoff functions that depend on the value of the underlying asset.