Derivatives are also called financial derivatives. Financial derivatives, also known as "financial derivatives", is a concept corresponding to basic financial products, which refers to derivative financial products whose prices change with the price (or value) of basic financial products. The basic product mentioned here is a relative concept, including not only spot financial products (such as bonds, stocks, bank time deposits, etc.). ), including financial derivatives. As the basis of financial derivatives, variables include interest rate, exchange rate, various price indexes, inflation rate and even weather (temperature) index. Derivative securities are financial instruments derived from traditional financial instruments such as currency, bonds and stocks, which are characterized by leverage and credit transactions.

Hedging is the main function of derivative financial instruments. However, due to the characteristics of leverage, complexity and speculation, derivative financial instruments have the natural attributes of high returns and high risks. Improper use, rash participation or excessive speculation may bring huge losses to enterprises. The painful lessons of Zhuzhou Smelter Futures Event, State Reserve Copper Futures Event and CAO Option Event are still fresh in people's minds. The subprime mortgage crisis that broke out in 2007 had a great impact, which shocked the regulatory authorities and enterprises. However, we cannot doubt or even deny the positive role of derivative financial instruments because of individual historical events. The original intention of creating derivative financial instruments is to hedge risks, and the use effect depends on the users rather than the instruments themselves. Therefore, in view of the overwhelming news reports that the use of derivative financial instruments has caused huge losses, we need to calmly analyze and think about the present situation and feasibility of hedging with derivative financial instruments.