derivative

noun
de·​riv·​a·​tive | \ di-ˈri-və-tiv How to pronounce derivative (audio) \

Definition of derivative

 (Entry 1 of 2)

1 linguistics : a word formed from another word or base : a word formed by derivation "pointy," "pointed," and other derivatives of "point"
2 : something derived … the sonata form (itself a derivative of opera) …— Kingsley Martin the name "Mia" is a derivative of "Maria"
3 mathematics : the limit of the ratio of the change in a function to the corresponding change in its independent variable as the latter change approaches zero

4 chemistry

a : a chemical substance related structurally to another substance and theoretically derivable from it
b : a substance that can be made from another substance Petroleum is a derivative of coal tar. soybean derivatives
5 : a contract or security (see security sense 3) that derives its value from that of an underlying asset (such as another security) or from the value of a rate (as of interest or currency exchange) or index (see index entry 1 sense 1b) of asset value (such as a stock index)

derivative

adjective

Definition of derivative (Entry 2 of 2)

1 linguistics : formed from another word or base : formed by derivation a derivative word
2 : having parts that originate from another source : made up of or marked by derived elements a derivative philosophy
3 : lacking originality : banal a derivative performance a film using a derivative plot device

Keep scrolling for more

Other Words from derivative

Adjective

derivatively adverb
derivativeness noun

Synonyms & Antonyms for derivative

Synonyms: Noun

by-product, derivate, derivation, offshoot, outgrowth, spin-off

Synonyms: Adjective

secondary, secondhand

Antonyms: Noun

origin, root, source

Antonyms: Adjective

basic, original

Visit the Thesaurus for More 

Examples of derivative in a Sentence

Noun

The word “childish” is a derivative of “child.” Tofu is one of many soybean derivatives. Petroleum is a derivative of coal tar.

Adjective

A number of critics found the film derivative and predictable. His style seems too derivative of Hemingway.
See More

Recent Examples on the Web: Noun

Here the approach feels derivative, mostly because the psychology beneath it is so hollow. Caryn James, The Hollywood Reporter, "'The Giant': Film Review | TIFF 2019," 8 Sep. 2019 To pay for the difference, Harris wants to tax stock trades at 0.2% of the value of the transaction, 0.1% for bonds and 0.002% for derivatives. Juana Summers, chicagotribune.com, "Sen. Kamala Harris releases single-payer health care plan with role for private insurance," 29 July 2019 To pay for the difference, Harris wants to tax stock trades at 0.2% of the value of the transaction, 0.1% for bonds and 0.002% for derivatives. Juana Summers, Anchorage Daily News, "Kamala Harris’ new health plan draws critics from all sides," 29 July 2019 There are also a slew of derivatives — from grunts and slumps to sonkers and pandowdies — all homespun desserts of fruit and something floury and sweet to tie it all together. Marcy Goldman, Twin Cities, "With less sugar, these cobblers, crisps and crumbles let their fruit flavors shine brighter," 15 Aug. 2019 Opt for formulas that are free of insect repellents or derivatives of vitamin A (retinyl palmitate, retinol, retinyl acetate, retinyl linoleate, and retinoic acid), which can cause increased skin photosensitivity and oxidative damage. Jenna Rosenstein, Harper's BAZAAR, "Is Your Sunscreen Safe? The Case for Switching to a Mineral Sunscreen," 12 Aug. 2019 Damon Vincent Jobin, 34, of Huntington Beach is accused of distributing pills containing fentanyl or a derivative of the synthetic opioid. Daily Pilot, "H.B. man pleads not guilty to fentanyl distribution; authorities allege he fled to Thailand before recapture," 8 Aug. 2019 The fact that a handful of the J.C. Penney’s creditors are believed to also be sellers of near-term derivatives that protect against default is seen as a key driver in the push for formal talks, which haven’t started yet. Allison Mcneely, Fortune, "J.C. Penney’s Financial Woes Might Be Eased With a Debt Swap," 7 Aug. 2019 There are also a slew of derivatives — from grunts and slumps to sonkers and pandowdies — all homespun desserts of fruit and something floury and sweet to tie it all together. Marcy Goldman, Washington Post, "With less sugar, these cobblers, crisps and crumbles let their fruit flavors shine brighter," 6 Aug. 2019

Recent Examples on the Web: Adjective

The one thing that would stop that is if in the agreement, it clearly was stated that Nike couldn’t make any derivative works or new works based off (Leonard’s) original sketch. Patrick Danner, ExpressNews.com, "Nike slaps Kawhi Leonard with counter suit over hand logo," 18 July 2019 While state law previously defined marijuana as the cannabis plant and its derivative products, the new law defines marijuana as containing more than 0.3% THC. Robert T. Garrett, Dallas News, "Keep enforcing marijuana laws, Abbott, Patrick, Bonnen, Paxton tell prosecutors amid hemp law confusion," 18 July 2019 Too many of the new songs sound diligent and derivative, as if Sleater-Kinney were working through a pop apprenticeship. Jon Pareles, BostonGlobe.com, "Sleater-Kinney veers off course on ‘The Center Won’t Hold’," 21 Aug. 2019 The Kokang minority was long associated with the production of illicit drugs, such as opium and its derivative, heroin, but claims to have left the trade. Washington Post, "Myanmar ethnic rebel alliance makes coordinated attacks," 15 Aug. 2019 After a delay pushed the release into early 1984, though, the great video game crash of 1983 had pretty much eliminated any chance of an unknown (and pretty derivative) game finding interest from distributors. Kyle Orland, Ars Technica, "Atari 2600 rarity Extra Terrestrials goes on sale for $90,000," 13 July 2019 Bringing back the setting’s original villain and reprising some of its narrative and cinematographic techniques could easily have made the season feel derivative, but Oleson has managed to bring new polish and nuance to the formula. Samantha Nelson, The Verge, "Most Read," 12 Oct. 2018 Ostpunk was crude and derivative, but the Ostpunks were doing more than aping Western poses. Dominic Green, WSJ, "‘Burning Down the Haus’ Review: East German Punks," 20 Sep. 2018 Harris didn’t offer a cost estimate but proposed to help pay for her program with a 0.2% tax on Wall Street stock trades, a 0.1% tax on bond trades and a 0.002% tax on derivative transactions. Bloomberg, The Mercury News, "Kamala Harris unveils ‘Medicare for All’ plan that preserves private insurance," 29 July 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'derivative.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

See More

First Known Use of derivative

Noun

15th century, in the meaning defined at sense 1

Adjective

circa 1530, in the meaning defined at sense 1

History and Etymology for derivative

Noun

see derive

Adjective

see derive

Keep scrolling for more

Learn More about derivative

Statistics for derivative

Last Updated

13 Sep 2019

Look-up Popularity

Time Traveler for derivative

The first known use of derivative was in the 15th century

See more words from the same century

Keep scrolling for more

More Definitions for derivative

derivative

noun

Financial Definition of derivative

What It Is

A derivative is a financial contract with a value that is derived from an underlying asset. Derivatives have no direct value in and of themselves -- their value is based on the expected future price movements of their underlying asset.

How It Works

Derivatives are often used as an instrument to hedge risk for one party of a contract, while offering the potential for high returns for the other party. Derivatives have been created to mitigate a remarkable number of risks: fluctuations in stock, bond, commodity, and index prices; changes in foreign exchange rates; changes in interest rates; and weather events, to name a few.

One of the most commonly used derivatives is the option. Let's look at an example:

Say Company XYZ is involved in the production of pre-packaged foods. They are a large consumer of flour and other commodities, which are subject to volatile price movements.

In order for the company to assure any kind of consistency with their product and meet their bottom-line objectives, they need to be able to purchase commodities at a predictable and market-friendly rate.  In order to do this, company XYZ would enter into an options contract with farmers or wheat producers to buy a certain amount of their crop at a certain price during an agreed upon period of time. If the price of wheat, for whatever reason, goes above the threshold, then Company XYZ can exercise the option and purchase the asset at the strike price. Company XYZ pays a premium for this privilege, but receives protection in return for one of their most important input costs. If XYZ decides not to exercise its option, the producer is free to sell the asset at market value to any buyer. In the end, the partnership acts as a win-win for both parties: Company XYZ is guaranteed a competitive price for the commodity, while the producer is assured of a fair value for its goods.

In this example, the value of the option is "derived" from an underlying asset; in this case, a certain number of bushels of wheat.

Other common derivatives include futures, forwards and swaps.

Why It Matters

As often is the case in trading, the more risk you undertake the more reward you stand to gain. Derivatives can be used on both sides of the equation, to either reduce risk or assume risk with the possibility of a commensurate reward.

This is where derivatives have received such notoriety as of late: in the dark art of speculating through derivatives. Speculators who enter into a derivative contract are essentially betting that the future price of the asset will be substantially different from the expected price held by the other member of the contract. They operate under the assumption that the party seeking insurance has it wrong in regard to the future market price, and look to profit from the error.

Contrary to popular opinion, though, derivatives are not inherently bad. In fact, they are a necessity for many companies to ensure profits in volatile markets or provide mitigated risk for everyday investors looking for investment insurance.

Source: Investing Answers

derivative

noun

English Language Learners Definition of derivative

 (Entry 1 of 2)

: a word formed from another word
: something that comes from something else : a substance that is made from another substance

derivative

adjective

English Language Learners Definition of derivative (Entry 2 of 2)

usually disapproving : made up of parts from something else : not new or original
: formed from another word

derivative

noun
de·​riv·​a·​tive | \ di-ˈri-və-tiv How to pronounce derivative (audio) \

Kids Definition of derivative

 (Entry 1 of 2)

1 : a word formed from an earlier word or root The word “Childhood” is a derivative of “child.”
2 : something that is formed from something else Gasoline is a derivative of petroleum.

derivative

adjective

Kids Definition of derivative (Entry 2 of 2)

: formed from something else a derivative product

Other Words from derivative

derivatively adverb

Keep scrolling for more

derivative

adjective
de·​riv·​a·​tive | \ di-ˈriv-ət-iv How to pronounce derivative (audio) \

Medical Definition of derivative

 (Entry 1 of 2)

1 : formed by derivation
2 : made up of or marked by derived elements

derivative

noun

Medical Definition of derivative (Entry 2 of 2)

1 : something that is obtained from, grows out of, or results from an earlier or more fundamental state or condition
2a : a chemical substance related structurally to another substance and theoretically derivable from it
b : a substance that can be made from another substance

derivative

noun
de·​riv·​a·​tive | \ də-ˈri-və-tiv How to pronounce derivative (audio) \

Legal Definition of derivative

 (Entry 1 of 2)

: a contract or security that derives its value from that of an underlying asset (as another security) or from the value of a rate (as of interest or currency exchange) or index of asset value (as a stock index)

Note: Derivatives often take the form of customized contracts transacted outside of security exchanges, while other contracts, such as standard index options and futures, are openly traded on such exchanges. Derivatives often involve a forward contract.

derivative

adjective

Legal Definition of derivative (Entry 2 of 2)

1 : arising out of or dependent on the existence of something else — compare direct
2 : of, relating to, or being a derivative a derivative transaction

Other Words from derivative

derivatively adverb

Keep scrolling for more

Comments on derivative

What made you want to look up derivative? Please tell us where you read or heard it (including the quote, if possible).

WORD OF THE DAY

formidable, illustrious, or eminent

Get Word of the Day daily email!

Test Your Vocabulary

The Exceptions Quiz III

  • one green toy robot amidst many red toy robots
  • Which of these words does not mean "nonsense"?
Spell It

Can you spell these 10 commonly misspelled words?

TAKE THE QUIZ
Dictionary Devil

Test Your Knowledge - and learn some interesting things along the way.

TAKE THE QUIZ
Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!