What are derivatives and how do they work
Derivatives allow investors to bet on the possible future price of an asset, which can be anything from stocks, bonds and commodities to currencies and interest rates
The first account of a derivative contract being used was recorded by Greek philosopher Aristotle. According to the account, Greek philosopher Thales decided to buy the exclusive right to the use all the olive presses of the towns of Chios and Miletus after the harvest. Since the deal was made in winter, and there was no way to know if the olive harvest would be good, he was able to secure the contract at a lower price. The owners of the olive presses saw this as a way to make up for at least some of the losses they would incur if the harvest turned out to be poor. Fortunately for Thales, the harvest was excellent and the demand for olive presses shot up, and he made a huge profit by renting them out.