Derivative

A Derivative is a financial instrument that offers a return based on the return of some other underlying asset.

A derivative has a defined and limited life.
A derivative contract initiates on a certain date and terminats on a later date.
Often the derivative's payoff is determined and/or made on the expiration date, although that is not always the case.

In accordance with the usual rules of the law, a derivative contract is an agreement between 2 parties in which each does something for the other.