When investors are not optimistic about the stock market, they can short the futures through the hedging function of stock index futures to lock in the book profit of stocks, so that they don't have to sell their stocks, resulting in panic arbitrage in the stock market.

Arbitrage refers to the principle that the basis difference between stock index futures and spot index will converge to zero on the delivery date. When the basis is positive, short stock index futures and buy the index components of stock index futures at the same time, or when the basis is negative, make multiple stock index futures and short securities at the same time to obtain risk-free returns. Reduce stock market volatility

Stock index futures can reduce the daily average amplitude and monthly average amplitude of the stock market, and restrain the irrational fluctuation of the stock market. For example, the daily average amplitude of the Shanghai and Shenzhen 300 Index was 2.5 1% and the monthly average amplitude was 14.9% in the five years before the introduction of stock index futures, and it was 1.95% and 10.7% in the five years after the introduction.

Financial derivatives such as stock index futures provide investors with risk hedging tools, which can enrich different investment strategies, change the status quo of consistency of stock market trading strategies, provide investors with diversified wealth management tools, and achieve long-term stable income goals.