Usually refers to financial instruments derived from underlying assets (underlying asserts). Since many financial derivative transactions do not have corresponding accounts on the balance sheet, they are also called off-balance sheet transactions (referred to as off-balance sheet transactions).

Financial derivatives can be classified from different perspectives, but classification according to transaction methods and characteristics is the most basic and common classification method for financial derivatives, and most research on derivatives is also based on this Therefore, this article briefly introduces the concepts of these four types of financial derivatives and uses them as the object of discussion.

1. Financial forward

The so-called financial forward refers to a contract that stipulates that both parties agree to buy or sell an agreed quantity of related assets or financial instruments at an agreed price on a specified future date. At present, there are mainly forward foreign exchange contracts, forward interest rate agreements, etc. Financial forward contracts are usually signed between two financial institutions or between a financial institution and its customers, and their transactions are generally not conducted on standardized exchanges. Therefore, financial forward contract transactions are generally smaller in scale, more flexible, and both parties involved in the transaction Ease of negotiation of contract conditions according to respective wishes. During the validity period of a forward contract, the value of the contract changes with the fluctuation of the market price of the relevant assets or related financial values. The longer the delivery period of the contract, the more speculative it is and the greater the risk.

2. Financial futures

The so-called financial futures refer to standardized contracts that require both parties to deliver specific commodities or financial instruments at an agreed price in a certain period in the future. Currently, they mainly include interest rate futures, Foreign exchange futures, bond futures, stock price index futures, etc. Financial futures contracts are very similar to financial forward contracts. They are also a way for both parties to complete a specific asset transaction at an agreed price in a certain period in the future. However, transactions in financial futures contracts are completed in organized exchanges, and the content of the contract, such as the type, quantity, price, delivery time, delivery location, etc. of related assets, are standardized. The return determination of financial futures is consistent with that of financial forward contracts.

3. Financial options

The so-called financial options refer to the stipulation that the buyer of the option has the right to buy or sell a certain amount at the agreed price at an agreed time or within an agreed period. The right to a certain related asset or financial instrument, and you can also give up the contract to exercise this right if necessary. Currently, there are mainly foreign exchange options, foreign exchange futures options, interest rate options, interest rate futures options, bond options, stock options, stock price index options, etc. . In order to obtain such a right, the buyer of an option contract must pay a certain amount of fee to the seller, that is, the option premium. Options are divided into two basic types: call options and put options. The buyer of a call option has the right to purchase the related asset at a certain price at a certain time; the buyer of the put option has the right to sell the related asset at a certain time and at a certain price.

4. Financial swaps

Financial swaps, also translated as "financial swaps", refer to the agreement between the two parties to the transaction based on a predetermined nominal principal amount within the validity period of the contract. Contracts that exchange payments with each other according to agreed payment rates (interest rates, stock index yields, etc.) currently mainly include foreign exchange swaps, interest rate swaps, currency swaps, bond swaps, mortgage swaps, etc. A swap contract can essentially be broken down into a portfolio of forward contracts.