Put simply, a derivative is something that derives its value based on some other asset. E.g. In equities, derivatives are specialised contracts / agreements to buy or sell the underlying asset (equity shares) up to a certain time in the future at a price, which is called the 'exercise price'. These contracts have a fixed expiry period, unlike equity shares, usually a month.The value (price) of the contract depends on the expiry period and also on the price of the underlying asset.Thus, derivatives are based on the underlying asset (equity) and are not equity shares by themselves.