The basic characteristics of hedging: buying and selling the same commodity in the spot market and the futures market at the same time, that is, selling or buying the same amount of futures in the futures market while buying or selling the real thing. After a period of time, when the price changes make the profit and loss in spot trading even, the losses in 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.
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 rise and fall together; However, due to the opposite operation of these two markets, the profit and loss are also opposite, and the profit of the futures market can make up for the loss of the spot market.
The trading principles of hedging are as follows:
1. The principle of opposite transaction direction;
2. The principle of similar goods;
3. The principle of equal quantity of commodities;
4. The same or similar principles.
In fact, hedging in the futures market is a kind of venture capital behavior aimed at avoiding the risk of spot trading, and it is an operation combined with spot trading. Soybean hedging case
Example of selling hedging: (This example is only used to illustrate the principle of hedging, and the specific operation should consider the transaction fee, position fee and delivery fee. )
In July, the spot price of soybean was 20 10 yuan per ton. A farm is satisfied with the price, but soybeans will not be sold until September, so the unit is worried that the spot price may fall by then, thus reducing its income. In order to avoid the risk of future price decline, the farm decided to trade soybean futures on Dalian Commodity Exchange. The transaction situation is shown in the following table:
Spot market futures market
In July, the soybean price was 20 10 yuan/ton, and the transaction was 10 lot. September soybean contract: the price is 2050 yuan/ton.
Soybean sold in September100t: price 1980 yuan/ton; Buy soybean 10 lot in September: the price is 2020 yuan/ton.
Arbitrage results in a loss of 30 yuan/ton and a profit of 30 yuan/ton.
The final net profit is 100*30- 100*30=0 yuan.
Note: 1 hand = 10 ton.
From this example, we can draw the following conclusions: First, the complete sell hedging actually involves two futures transactions. The first is to sell futures contracts, and the second is to sell the spot in the spot market and buy the original position in the futures market. Second, because the trading order in the futures market is to sell first and then buy, this example is selling hedging. Third, through this set of hedging transactions, although the spot market price has changed adversely to farms, the price has dropped by 30 yuan/ton, resulting in a loss of 3,000 yuan; However, trading in the futures market made a profit of 3,000 yuan, eliminating the impact of adverse price changes.