Derivatives are not Great
With apologies to Christopher Hitchens, I do not have a litany of sins committed by churchs to bolster my strident claims. The emperor may not have had clothes, but the Catholic Popes wore full papal regalia while abetting their clergy to strip children naked and sexually abused them.
My only ammunition is asking embarrassingly simple questions that might turn the faces of experts in Financial Mathematics bright red. I count myself as an apostate member of that tribe who endeavous to shed myself of unecessarily complicated mathematical ornaments. Why get angry about a simple question if you have a simple answer? Why not use your knowledge and experience to encourage others behind you to keep advancing the theory?
A derivative is a contract. I will give you this on these dates if you will give me that on those dates. Warren Buffet called them "weapons of financial mass destruction" but portfolio managers at Berkshire Hathaway trade them every day to manage their risk. They are a Genie that cannot be put back in the bottle. They have been employed ever since Korg promised a bear skin in one week if Grok gave him three arrow heads tomorrow. The most valuable commodity in the world is trust. It cannot be manufactured or bought. If Korg did not deliver he would be ostrisiesed by his tribe. Things are more complicated in the modern world
Korg and Grok are now legal entities and ostricism has been replaced by rule of law as a last resort when trust breaks down. If you are running a business you must pay attention to the counterparties you do transactions with and hire lawyers to write contracts that can be put in front of judges in order to protect yourself from bad actors. If you have a good lawyer they will write a contract that will dissuade the lawyer your counterparty hired from going throught that expense.
This is completely out of the realm of current mathematical finance theory.