Also known as long-term hedging, spot prices and futures prices have risen, and the profits in the futures market have largely offset the losses caused by the rise in spot prices. Feed enterprises have achieved good hedging effect, effectively preventing the risks brought by rising raw material prices.

However, because the increase of spot price is greater than that of futures price, the basis is enlarged, which makes the loss of feed enterprises buying spot in the spot market greater than that of selling futures contracts in the futures market, and they still lose 1000 yuan after breakeven. This is caused by unfavorable changes in the foundation and is normal.

Investors who sell assets (mostly stocks) by expanding information buy corresponding futures in order to avoid risks. That is, investors choose to short in the spot market and long in the futures market. The reason is that investors are worried about rising asset prices, so they buy futures in the futures market, and when the price rises, they make up for the losses in the spot market through the profits in the futures market.

Investors plan to put a sum of money received in the future into the securities market. Before the funds are in place, investors think that the stock will rise in the short term. In order to reduce the loss caused by the need for higher prices when buying such assets in the future, investors can first buy futures contracts in the futures market, thus fixing the future purchase price of stocks.

Baidu Encyclopedia-Long Hedging