Derivatives can be used to manage risk in the production of goods. For instance I’ve invested money land rental, seeds and tractors. I hope to get the money bac

Derivatives can be used to manage risk in the production of goods. For instance I’ve invested money land rental, seeds and tractors. I hope to get the money back over the next ten years from selling wheat. But there is a risk that the price of fertilisers goes up too much over this period, risking that I don’t make my money back. So I could buy a derivative on the price of fertiliser so that if fertiliser goes up I don’t make money on the wheat, but I do on the fertiliser. And if the fertiliser goes down, I make money on the wheat. But this is not to say that I disagree about regulation. It would be nice if we could limit the depth of the transitive tree of contracts. But I doubt that is feasible.