Alert: shifting parts of speech! As a noun, a derivative is kind of financial agreement or deal. As an adjective, though, derivative describes something that borrows heavily from something else that came before it.

The economic meltdown of the last decade is due largely to the mismanagement of derivatives, which are deals based on the outcome of other deal. A movie plot might be described as derivative if it steals from another film — say, if it lifts the tornado, the witch, and the dancing scarecrow from The Wizard of Oz.

Definitions of derivative

n a compound obtained from, or regarded as derived from, another compound

Type of:
chemical compound, compound
(chemistry) a substance formed by chemical union of two or more elements or ingredients in definite proportion by weight

n the result of mathematical differentiation; the instantaneous change of one quantity relative to another; df(x)/dx

derived function, differential, differential coefficient, first derivative
the rate of change (at a point) of the angle between a curve and a tangent to the curve
partial, partial derivative
the derivative of a function of two or more variables with respect to a single variable while the other variables are considered to be constant
Type of:
calculation, computation, figuring, reckoning
problem solving that involves numbers or quantities

n a financial instrument whose value is based on another security

derivative instrument
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futures contract
an agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date; the contract can be sold before the settlement date
the right to buy or sell property at an agreed price; the right is purchased and if it is not exercised by a stated date the money is forfeited
naked option
a put or call option for which the seller or buyer has no underlying security position
covered option
a put or call option backed by the shares underlying the option
call, call option
the option to buy a given stock (or stock index or commodity future) at a given price before a given date
put, put option
the option to sell a given stock (or stock index or commodity future) at a given price before a given date
the option to buy or sell a given stock (or stock index or commodity future) at a given price before a given date; consists of an equal number of put and call options
incentive option, incentive stock option
an option granted to corporate executives if the company achieves certain financial goals
stock-index futures
a futures contract based on a stock index; a bet on the future price of the indexed group of stocks
stock option
the right to buy or sell a stock at a specified price within a stated period
lock-up option
an option to buy the crown jewels offered to a white knight in order to forestall a hostile takeover
Type of:
instrument, legal document, legal instrument, official document
(law) a document that states some contractual relationship or grants some right

n (linguistics) a word that is derived from another word

“`electricity' is a derivative of `electric'”
Type of:
a unit of language that native speakers can identify

adj resulting from or employing derivation

“a derivative process”
“a highly derivative prose style”
formed or developed from something else; not original

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