Hedging liquidation refers to the option contract settlement method in which the options held by investors are hedged with the same options with the opposite trading direction and equal trading quantity. Hedging refers to the settlement of previously bought (sold) contracts by selling (buying) futures contracts in the same delivery month. Closing a position refers to the behavior of futures traders to buy or sell futures contracts with the same variety, quantity and delivery month but in the opposite direction, and close futures trading.
The futures market is a two-way trading system. In a complete futures transaction, there are usually the following liquidation methods: first, buy-open the position first, then sell-close the position; Second, sell-open the position first, then buy-close the position; Third, purchase, pay the full deposit after the expiration to participate in the delivery and receipt; Fourth, sell and submit standard warehouse receipt (cargo certificate) to participate in delivery and collection after maturity. Among the above four methods, the first and second methods belong to "hedge liquidation".