1. Discount reflects the relationship between market supply and demand: discount is determined by the relationship between market supply and demand. When the market supply exceeds demand, the futures price will be lower than the spot price, forming a discount. This change in market supply and demand enables investors to lock in profits and avoid the risk of market price fluctuations through hedging operations, that is, buying spot and selling futures contracts at the same time.
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2. Hedging operation reduces costs: In hedging operation, investors can carry out arbitrage transactions between the spot market and the futures market to reduce investment costs. When the futures price is lower than the spot price, investors can sell futures contracts and buy the corresponding amount of spot to obtain more spot quantity.