Following up on my article about How to Explain Quantum Mechanics, I think it’s high time for the third-ever Scene Challenge. [Scene Challenge]

For the first one, Masturbating to Star Trek, you had to write an entire scene. For the second one, Make Your Introduction, you had to introduce one character. This time, it’s both simpler and more difficult:

Have a character explain derivatives, as used in the financial industry. (The thing that’s like a stock, not the thing that you learned in calculus.)

The speaker should be knowledgeable, and the listener should be a layman, i.e. a proxy for the audience. What are their names? What’s the story? What’s the genre? You decide, to the degree it matters. My suggestion would be to create a scenario in which the term needs to be explained — but only to the degree necessary. Metaphors and similes are powerful tools.

You’re welcome to write as much of the scene as you want, but the focus is on the explanation. The winning entry might be one sentence long. I strongly recommend you look at the original article for helpful suggestions.

Here are the rules:

  1. Post your entry in the comments thread of this article. Please don’t attempt fancy formatting. It usually just screws up the margins.
  2. All entries must be submitted by 8 a.m. PST on Thursday, May 8th, 2008. Remember that comments are sometimes held in moderation. Don’t submit twice. It will show up. Promise.
  3. I’ll pick a winner later that day.
  4. Winner receives hearty congratulations and a brief moment in the spotlight.

And…begin.

UPDATE: A reader asks a fair question: What if two explanations are very similar, and both great? Answer: The earlier entry wins. So there’s no benefit to waiting for the last minute, worrying that someone’s going to read your entry and do a knock-off version.

To summarize: Best entry first wins.