1. Hedging means that one investment deliberately reduces the risk of another investment. Therefore, it is an investment behavior, which is usually used to reduce business risks and ensure your profit in investment. The specific operation is to conduct two market-related transactions at the same time, with the opposite direction and the same quantity, and break even. Such a profit and a loss are hedging.

2. Hedging transaction mode:

(1) Hedging of stock index futures: Participate in stock index futures and stock spot market transactions at the same time, or trade stock index contracts with different maturities and different (but similar) categories at the same time to earn the price difference.

(2) Commodity futures hedging: when buying or selling a futures contract, selling or buying another related contract, and closing two contracts at a certain time.

(3) Statistical hedging: buy relatively undervalued investment varieties (stocks or futures), short-sell relatively overvalued varieties, and make profits when the spread returns to equilibrium.

(4) Option hedging: rights and obligations are priced separately, with unlimited income and limited risk loss.

(5) Fixed hedging: When investors participate in private placement, hedging with stock index futures is a better scheme to lock in income and reduce risks.