Stock Market: What is a Derivative?

Financial derivatives became very well known during the 2008 financial crisis given they were the cause of the Great Recession. This area of the stock market can become very confusing to new traders and those looking to better understand the economy; however, by taking a simple approach and asking yourself a couple of basic question, this topic becomes much clearer. Financial derivatives all revolve around the idea of "it depends...". Let me explain.