Financial derivatives refer to financial contracts whose value depends on one or more basic assets or indexes. The basic types of contracts include forward, futures, swaps and options. Financial derivatives also include mixed financial instruments with one or more characteristics of forward, futures, swaps and options.

(1) can be divided into four categories according to product form: forward, futures, options and swaps.

(2) According to the primary assets, it can be roughly divided into four categories, namely, stocks, interest rates, currencies and commodities.

(3) According to the transaction method, it can be divided into on-site transaction and off-site transaction.

The function of financial derivatives is to avoid risks, and price discovery is a good way to hedge asset risks. However, everything has its good side and bad side. If the risk is avoided, someone must bear it. The high leverage of derivatives is to transfer huge risks to those who are willing to bear them. Traders can be divided into three categories: hedgers, speculators and arbitrageurs. Hedgers use derivative contracts to reduce the risks they face due to market changes. Speculators use these products to bet on the future trend of market variables. Arbitrators use two or more transactions that offset each other to lock in profits. These three types of traders jointly safeguard the above functions of financial derivatives.