Benefits:

1, which promoted the prosperity of financial market and further promoted economic development.

2. It has the function of finding the price.

3. Investors can use derivatives such as options and futures to hedge and avoid risks.

4. Speculators can use leverage to speculate and get high profits.

Disadvantages:

1, derivatives are leveraged, investors have the opportunity to obtain high returns and face very high risks, which may lead to the bankruptcy of individual investors and even large financial institutions, such as commercial banks.

2. Derivatives can make a certain amount of funds play several times the role, and speculation may lead to turmoil in the financial market and even the whole economy, greatly increasing the risks of the whole financial system. For example, the famous quantum fund used derivatives to speculate, which directly led to several financial crises, including the Asian financial crisis of 1997, which caused serious damage to the whole world economy.

The full text is original, hope to adopt!