In the most basic hedging operation. After the fund manager bought a stock, he also bought a put option with a certain price and time limit. The utility of put option is that when the stock price falls below the option-limited price, the holder of seller option can sell his stock at the option-limited price, thus hedging the risk of stock decline. In another hedging operation, the fund manager first chooses a certain kind of bullish industry, buys a few good stocks in this industry and sells a few bad stocks in this industry according to a certain proportion. The result of this combination is that if the industry is expected to perform well, the increase of high-quality stocks will exceed other stocks in the same industry, and the income from buying high-quality stocks will be greater than the loss caused by shorting inferior stocks; If the expectation is wrong, the stocks of this industry will fall instead of rising, then the stocks of poor companies will fall more than the high-quality stocks. Then the profit of short selling will be higher than the loss caused by the decline in buying high-quality stocks. Because of this mode of operation, the early hedge fund can be said to be a form of fund management based on the conservative investment strategy of hedging.

Therefore, the price on the delivery date determines the profitability of hedge funds.