International Swaps And Derivatives Traders Association

In finance, a derivative is a contract between a buyer and a seller. The derivative can take various forms, depending on the transaction, but every derivative has the following four elements: an item (the "underlier") that can or must be bought or sold, a future act which must occur (such as a sale or purchase of the underlier), a price at which the future transaction must take place, and a future date by which the act (such as a purchase or sale) must take place. via Wikipedia ↗