1, hedge
From the perspective of the whole financial futures market, there are three main reasons why its hedging function can be realized:
First, many physical financial commodity holders face different risks, and the overall market risk can be controlled by reaching favorable transactions. For example, importers are worried about the rise of foreign exchange rate, while exporters are worried about the fall of foreign exchange rate, so they can hedge their risks by making a reverse forex futures trading.
Secondly, the futures price and spot price of financial commodities generally change in the same direction. After an investor establishes a position in the financial futures market that is opposite to the financial spot market, when the price of financial commodities changes, it is bound to gain in one market and lose in the other, and its profit and loss can be offset in whole or in part, thus achieving the purpose of avoiding risks.
Thirdly, the financial futures market has concentrated many speculators who are willing to take risks and make profits through standardized floor trading. Through frequent and rapid trading hedging, they transferred the price risk of physical financial commodity holders, thus realizing the hedging function of financial futures market.
Step 2 find the price
The discovery price function of financial futures market means that financial futures market can provide effective price information of various financial commodities.
In the financial futures market, there are many buyers and sellers of various financial futures contracts. They set the transaction price in a way similar to auction. This situation is close to a perfectly competitive market, which can reflect investors' expectations of financial commodity price trends and financial commodity supply and demand to a certain extent. Therefore, the transaction price of financial futures contracts can comprehensively reflect the influence of various factors in the financial market on the underlying commodities, which is characterized by openness and transparency.
Due to the development of modern electronic communication technology, the prices of major financial futures can generally be broadcast to all parts of the world in real time. Therefore, the price formed in the financial futures market not only plays a direct guiding role for all kinds of investors in the market, but also provides useful reference information for other related markets besides the financial futures market.
Extended data:
There are six differences between financial futures and commodity futures:
There is no difference between financial futures and commodity futures in trading mechanism, contract characteristics and institutional arrangements, but there are also differences:
1, some financial futures have no real underlying assets (such as stock index futures). ), and the object of commodity futures trading is goods in physical form, such as agricultural products;
2. Stock index futures are liquidated in cash on the delivery date, interest rate futures can be liquidated through the transfer of securities, and commodity futures and financial futures can be liquidated through the transfer of physical ownership;
3. The maturity date of financial futures contracts is standardized, generally in March, June, September,1February. The maturity date of commodity futures contracts varies with the characteristics of commodities;
4. The maturity date of financial futures is longer than that of commodity futures, and the futures contract of long-term US government bonds can be valid for several years;
5. The cost of holding is different. The cost of holding a futures contract to the maturity date is the holding cost, which includes three items: storage cost, transportation cost and financing cost. All kinds of goods need to be stored and kept, and storage costs are required. The subject matter of financial futures contracts needs low storage costs, and some, such as stock indexes, don't even need storage costs. If the subject matter of financial futures is deposited in financial institutions, there is still interest, such as stock dividends and foreign exchange interest. Sometimes these interests will exceed the storage cost, resulting in holding income.
6. The performance of speculation is different. Because the financial futures market is more sensitive to external factors than commodity futures, and the futures price fluctuates more frequently and more widely, it is more speculative than commodity futures.
Baidu encyclopedia-finance
Baidu encyclopedia-financial futures