Primary Use of Derivatives

In financial markets, derivatives are financial instruments whose value is derived from an underlying asset. They serve various purposes, including risk management, speculation, and enhancing liquidity. One of the primary uses of derivatives is to hedge against potential losses in investments. For example, a company may use futures contracts to lock in prices for raw materials it plans to purchase in the future.

Based on this background, consider the following question: What is the primary use of derivatives?