In finance, a derivative is a contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate. By this definition stocks also gets their value from underlying entity, then why we don't say stock buying Selling a derivative trading.option and future gets its value from stocks that's why it's derivatie but stocks gets its value from underlying asset then why it is not derivative trading.
1 Answer
A derivative derives its value from another financial asset. But a company's stock derives its value, at least in part, from the real assets of the company (tangible and intangible), whose value is somewhat subjective and is not separately discovered in real time by markets. Thus, within the financial space, a stock is a "primitive" asset not derived from anything else.
