Derivatives are a crowd-sourced predictive model. Thousands of people gathering on the bids and offers to voice their opinion on the future of an asset is essentially an efficient, real-time poll.
A crash in financial markets can be defined as a large fall in price in a short amount of time, but this definition leaves much to be desired for those looking to trade such an opportunity. What is a large fall from a historical data perspective? How often does this occur? Should you buy or sell?
Will this be the down day that kicks off the next stock market crash?! Buy-and-hold investors and contrarian traders alike ask themselves the same question with opposing hopes when equities take a dive like they did last Monday.