News In Brief

A derivatives product is… what exactly?

Kai Ryssdal Jul 18, 2011

This final note today — on the theory that news of business and the economy can be dense, an explainer.


Interviewer: So what exactly is a derivatives product?

Trader: Derivative products are a lot about leverage.

Interviewer: Got it. So what is leverage exactly?

Trader: A lot of leverage is about maximizing your margins.

Interviewer: OK, so how would you define “margins?”

Trader: Yeah, margins really come into play when talking about derivatives.

Interviewer: OK, so what is a derivatives product?

Trader: They’re kind of like stocks.

Interviewer: For our listeners who aren’t well versed in finance, what are stocks?

Trader: They fluctuate. Stocks definitely fluctuate.

Interviewer: What does that mean exactly?

Trader: It means that the market is cyclical.

Interviewer: And by “the market” you mean…

Trader: Buy low, sell high.

Interviewer: I’m sorry, what?

Trader: Supply and demand.

Interviewer: Excuse me?

Trader: Nature versus nurture.

Interviewer: Nature versus…

Trader: Mi casa es su casa.

Interviewer: What?

Trader: Mi casa… es… su casa.

Interviewer: You don’t even know what derivatives are, do you?


Maybe. Maybe not. Our skit was written by Insanitas Comedy. Michelle Philippe and Jonathan Karp brought it to life.

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