Questions:

Why is an option called a derivative?

What is the difference between a call and a put option?

Draw your net "payout" chart if today's stock price was $$\frac{100}{?}$ share, you purchased a call option at strike price $K_c=$$$110,$ and you purchased a put option at strike price $K_P=$$$90.$

If you were a rancher who plans to sell cattle in the future, would you be more likely to use a put or a call option to protect you from a potential decline in prices?