A spot enterprise should not only do a good job in selling finished products, but also worry about the changes in raw material prices. The function of futures to avoid risks is not to make money in the futures market, but to avoid the risks caused by abnormal fluctuations in raw material prices. Basically, risk aversion can be divided into buying hedging and selling hedging!
Buying hedging: suppose a textile enterprise expects to use cotton 100 tons in June, and the spot price in June is 23,000 yuan per ton. Enterprises believe that the price is reasonable, but they are worried that the price will rise when they buy in June. If they buy now, the funds of enterprises cannot be turned around at once, which is conducive to avoiding risks in the futures market. Suppose an enterprise buys 20 futures contracts (5 tons each) at a price of 23,500 per ton in the futures market. By June 5438+00, the price rose as expected by the enterprise, with 25,000 yuan per ton in spot and 25,500 yuan per ton in futures.
At this time, the enterprise bought the spot in the spot market at a price of 2,000 yuan per ton (25,000-23,000 yuan) higher than the spot price in June, which actually cost 2000 *100 = 200,000. The enterprise has bought in advance in the futures market and made a profit at this time, (25,500-23,500) * 5 * 20.
Maybe you will ask, if the price dropped, you could have bought a cheaper one. As a result, the cost of purchasing raw materials has increased because of hedging. Isn't that just not avoiding risks? For an enterprise, if it can control the production cost and set the sales price in advance, the scheduled profit will be good, and the enterprise will not be unable to produce or go bankrupt because the raw materials are unfavorable to the enterprise's production. Futures only help enterprises to control costs within a certain range and avoid unforeseen risks!