1. Hedging, commonly known as "Qin Hai", also known as hedging transaction, means that traders sell (or buy) the same number of futures trading contracts in the futures exchange as hedging. It is an act of temporarily replacing physical transactions with futures transactions in order to avoid or reduce the losses caused by unfavorable price changes.
Second, the basic characteristics of hedging: at a certain point in time, buying and selling the same commodity in the spot market and the futures market with the same quantity but in the opposite direction, that is, selling or buying the same quantity of futures in the futures market while buying or selling the real thing. After a period of time, when the price changes make the spot trading profit or loss, the losses in the futures trading can be offset or compensated. Therefore, hedging mechanisms are established between "now" and "period" and between short-term and long-term to minimize price risk.
Third, the theoretical basis of hedging: the trend of spot and futures markets is similar (under normal market conditions), because these two markets are affected by the same supply and demand relationship, and their prices go up and down together; However, due to the opposite operation and profit and loss of the two markets, the profit of the futures market can make up for the loss of the spot market, or the appreciation of the spot market offsets the loss of the futures market.
4. Stock index futures buying hedging refers to a trading method in which investors buy the corresponding stock index futures contracts for hedging because they are worried about the rising price of the target index or stock portfolio, that is, first establish long trading positions (positions) in the futures market, and then hedge at the end of the hedging, so it is also called "long hedging". The purpose of buying hedging is to lock in the buying price of the target index fund or stock portfolio and avoid the risk of price increase.
5. Selling hedging of stock index futures refers to a hedging method in which investors sell the corresponding stock index futures contracts because they are worried about the falling price of the target index or stock portfolio, that is, opening positions in the futures market to sell stock index futures contracts, and then buying and closing positions after falling, so it is also called "short hedging". The purpose of selling hedging is to lock the selling price of the target index or stock portfolio and avoid the risk of price decline.
Six, the key to the correct decision-making of enterprise production and operation is whether to correctly grasp the market supply and demand, especially whether to correctly grasp the next trend of market changes. The establishment of the futures market not only enables enterprises to obtain the supply and demand information of the future market through the futures market, but also improves the scientific rationality of the enterprise's production and operation decision-making, and truly determines the production on demand. It also provides a place for enterprises to avoid market price risks through hedging, which plays an important role in improving the economic benefits of enterprises.