For example, if you hold a long futures position, he allows you to buy this thing at a specified price within a specified time.

At this time, a man from China, 10 months later, wanted to offer 50W dollars to others.

If the RMB exchange rate rises after 10 months, this person will pay less for 50W.

On the contrary, give more losses.

Then how much he gives will be affected by the interest rate, which is risky.

He can choose to enter a futures with a long delivery time of $ 50W, that is, 10 months (assuming such futures exist).

According to the futures agreement, 1 USD is converted into 7 RMB, so he will only pay 350W RMB regardless of the exchange rate after 10.

In this way, the result is affirmative, and he has no risk.

In this way, he used derivatives to avoid risks.

There is also a derivative, such as call option, which gives people the right to buy or sell the subject matter at the agreed price within the agreed period.

Or just an example.

This person can buy a call option with a target of $ 50W.

If the option allows him to exchange 7 RMB 1 USD for 50W.

Then, if 6 yuan RMB is converted into 1 USD at maturity, this person can pay with 300W without exercising the option.

If 8 yuan RMB is converted into 1 USD at maturity, he can exercise the option and pay with 350W.

Then he can certainly complete the payment with 350W or less power, so there is no risk.