1. profit: By participating in futures trading, futures hedging basically locks the price of the securities that need to be hedged. If the future price of futures hedging is unfavorable to it, futures trading can avoid the losses caused by price changes.

2. Disadvantages: If future price changes are favorable, futures trading will make it lose possible profit opportunities. It is difficult to predict the changes in the futures hedging market. The purpose of futures hedgers is only to preserve value, and futures hedging does not profit from market changes.

Extended data

The biggest risk of hedging is basis risk. The change direction of futures price and spot price is basically the same, but the amplitude is different, that is, the value of basis is not constant.

Hedgers participate in the futures market in order to avoid the risk of large price changes in the spot market and accept relatively small risk of basis changes. As can be seen from the above economic principles, hedging is a conscious hedging measure, aiming at reducing the price risk in the spot market.

Hedgers operate in the futures market and the spot market in reverse, resulting in a profit and a loss in both markets, so as to avoid price risks through breakeven. Therefore, it can be said that hedging is equivalent to insurance involving price risk in the course of operation, and basis risk is the price that may be borne by purchasing insurance.