What is stock index futures hedging? What is the significance of stock index futures hedging?
What is stock index futures hedging? Stock index futures hedging refers to the hedging behavior of futures contracts with Shanghai and Shenzhen 300 stock indexes as the target. The main operation method is the same as commodity futures hedging. That is, reverse operations are carried out in the stock spot and futures markets. The hedging of stock index futures is based on the principle that the change trend of stock price and stock price index is the same direction and the same amplitude. Because the stock price index is a group of indexes of stock price changes, the reverse operation of spot market and stock index futures market can offset the risk. This can avoid risks and avoid the losses that future price fluctuations may bring to market participants. What is the significance of stock index futures hedging? For institutional investors such as securities investment funds, if there is no short-selling mechanism, even if the fund manager foresees the market decline in advance, it will not be able to avoid market risks in time, and only by reducing stock positions can the losses be reduced. At the same time, due to the large fund position, it is impossible to withdraw completely in time when the market falls. Especially for open-end funds, once the downward trend of the market has not changed in a short time, fund managers will face increasing pressure to cash out. In order to ensure payment and redemption, some assets must be realized, which will further reduce the share price of the fund, affect the net asset value of the fund, and even force the fund to face the dilemma of large-scale redemption and liquidation. After the introduction of stock index futures in China, institutional investors will be able to use stock index futures to hedge, avoid systemic risks and avoid the above situation.