When the price of wheat is 2000 yuan per ton, it is estimated that the price of wheat will fall. You signed a (first-class) contract with the buyer in the futures market, for example, you agreed to sell him 10 ton of standard wheat at a price of 2000 yuan per ton at any time within six months. (the value is 2000× 10 = 20000 yuan, calculated in 600 yuan. )
This is a short-selling wheat at the price of 2000 yuan.
Why should a buyer sign a contract with you? Because he's awesome.
When signing a contract, you don't necessarily have wheat in your hand (generally you don't really want to sell wheat). If you observe the market, as you wish, it drops to 1800 yuan per ton, you buy 100 tons of wheat per ton/800 yuan, and sell it to the buyer at 2000 yuan per ton, and the contract is fulfilled (yours
(2000-1800) × 10 = 2000 (yuan) (the handling fee is generally10 yuan, which is ignored).
This is a flat wheat bought in 1800 yuan.
In practice, you only need to sell a hand of wheat in 2000 and buy a flat at 1800, which is very convenient.
If the price of wheat rises within half a year, you have no chance to buy low-priced wheat to close your position, you will be forced to buy high-priced wheat to close your position (the contract must be closed at the expiration), you will lose money, and the buyer who signed with you will make a profit.
If you close your position at 2200, you will lose money:
(2200-2000)× 10=2000 (yuan)+10 yuan handling fee.