Eli5: It’s said that the derivatives market is worth over $1,000,000,000,000,000. Where did all of this money come from?

Question

Eli5: It’s said that the derivatives market is worth over $1,000,000,000,000,000. Where did all of this money come from?

In: 5

Answer 1

In a derivatives transaction, one person ends up owing another person money. That is probably the total amount of money owed.

Basically one person gets money and one person gets negative money. Derivatives are like gambling. For every winner there’s a loser.