What are the functions of stock index futures?
1 Stock hedging function:
Stock hedging refers to investors buying or selling stock index futures contracts to compensate for the actual losses caused by the price changes in the stock spot market. If the stock falls, the profits gained by the bears can be used to make up for the losses caused by the decline of stock assets. If the stock price rises, the profits gained by the bulls can be used to make up for the need to buy stocks in the future.
The specific method is: if stock holders want to avoid or reduce the losses caused by the stock price decline, they can sell stock index futures in the futures market, that is, short.
2 the function of speculative profit:
Short selling-buying stock index futures contracts: speculators buy stock index futures contracts in order to profit from price fluctuations. When investors predict that the stock index will rise, they can buy a stock index futures contract for a certain delivery month. Once the forecast is accurate and sold at a high price, investors can get the difference profit brought by price changes.
Short selling-selling stock index futures contracts: the purpose of speculators selling stock index futures contracts is to obtain profits brought by price changes. A speculator predicts that the price of stock index futures will fall and can sell the stock index futures contract in a certain delivery month in advance. Once the prediction is accurate, he will buy the futures contract sold before again and earn the difference profit between the two contracts.
To sum up, stock index futures not only have the general economic functions of futures trading, that is, avoiding risks and finding prices; It also has the primary function of stock index futures-stock hedging. In addition, stock index futures can provide speculative profits for investors who have no stock assets in their hands.