First of all, what do we mean by financial derivatives? Financial derivatives refer to derivative financial products based on basic products or basic variables (money, bonds and stocks are traditional financial instruments), and their prices are determined by the changes of the latter. Their basic characteristics are: 1, intertemporal trading, 2, leverage effect, 3, uncertainty and high risk, 4, hedging and speculative arbitrage.

Common tools are:

1, futures contract. Futures contract refers to the standardized contract made by the futures exchange to deliver a certain quantity and quality of physical or financial goods at a specific time and place in the future.

2. option contracts. Option contract refers to the option contract that the buyer of the contract can get after paying a certain amount. Warrants launched in the securities market belong to call options, while put warrants belong to put options.

3. Forward contracts. Forward contract refers to a contract in which both parties agree that the buyer will buy a certain amount of subject matter from the seller at an agreed value on a certain date in the future.

4. Swap contracts. A swap contract refers to a contract in which both parties exchange a series of cash flows in a certain period in the future. According to different contract items, swaps can be divided into interest rate swaps, currency swaps, commodity swaps and equity swaps. Among them, interest rate swap and currency swap are more common.

Risks to be noted:

(1) The credit risk of losses caused by the other party's breach of contract or non-performance of commitments in the transaction;

(2) the market risk that adverse changes in the price of assets or indexes may lead to losses;

(3) Lack of counterparties in the market leads to the liquidity risk that investors cannot liquidate or realize their positions;

(4) Settlement risks that may be caused by the counterparty's failure to pay or deliver on time;

⑤ Operational risks caused by human error or system failure or control failure of trading or management personnel;

⑥ Legal risks caused by non-compliance with the laws of the host country, non-performance or omission, and ambiguous terms of the contract.