A derivative is a security in the form of an agreement signed between two or more entities to buy or sell assets in the future. This agreement is called a contract. Investors make profits by anticipating the future value of that asset. While trading on a contract, you only pay a margin and not the entire amount, which could sometimes run into large amounts. This will allow you to maintain a high outstanding, and the profit earned from accurate predictions results in an exponentially high growth. Investors trade equity derivatives in order to transfer or transform the risks associated with assets. This risk is shifted from risk-averse individuals to those who undertake heavy risks in the share market, thus allowing the former to enhance their safety.