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

Speculators.

To invest in a company, you have to do a lot of fact-finding about that specific company.

If you just have a hunch, that’s hard to invest directly in. To appeal to this sort of speculator, derivatives generalize a market niche and offer a pre-made package of assets.