Derivatives are speculative techniques betting on future asset-price movements

Evidence

The ephemeral ectoplasm holding the whole system together are derivatives: complex techniques for borrowing or speculating on future rises and drops in asset prices, including practices of “hedging” or betting against the increased value of an asset (as in betting against the value of the Argentinian Peso or the Thai Baht). — Max Haiven, Cultures of Financialization, 153

Categorization

• DEFINE: Defines derivatives and hedging with concrete examples.
• XREF: connects to: Derivatives differ from assets in being zero-sum trades for the parties — Mark Blyth, Austerity: The History of a Dangerous…, 705; A derivative is a time-bounded bet, not a property claim — Mark Blyth, Austerity: The History of a Dangerous…, 87; Derivatives inverted from insurance into engines that increase volatility exposure. — Aris Komporozos-Athanasiou, Speculative Communities: Living with…, 91 (+16 more)

Broader Connections

• Modern derivatives increase exposure to volatility to profit from it. #corroborates (0.85) — Aris Komporozos-Athanasiou, Speculative Communities, 59
• Prediction markets are the newest form of speculative competition #expands (0.80) — Aris Komporozos-Athanasiou, Speculative Communities, 447
• Derivatives do not reflect risk but actively produce contingencies and value #complicates (0.75) — Aris Komporozos-Athanasiou, Speculative Communities, 390
• Derivatives let investors tailor risk exposure precisely and have become tradable commodities themselves #responds-to (0.75) — Max Haiven, Cultures of Financialization, 478
• Derivatives are capital’s security form binding present to future. #qualifies (0.72)
• Speculation is an imaginative act detached from asset value, pricing others’ future desires #expands (0.72) — Aris Komporozos-Athanasiou, Speculative Communities, 215
• Computer-generated complexity caused herd buying of incomprehensible derivatives #complicates (0.72) — Yanis Varoufakis, Technofeudalism, 223
• Economists’ endorsement legitimated derivatives markets that regulators viewed as gambling #expands (0.70) — Donald MacKenzie, An Engine, Not a Camera, 1135