A type of trade or instrument which has a value dependent on an observable value, which is usually, but not always, the price of a physical commodity.
The observable value is called the underlier
Any energy trade type that does not involve immediate delivery is a derivative - because the value of the future delivery varies with the expected price of that commodity at that location at the time of delivery
The only significant exception is a Spot or Prompt trade, which involves immediate, or near immediate delivery
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Dark Energy Consulting is a registered trademark and trading name of Sales Automation Systems Ltd.
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