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What does naked stock index futures mean? What does naked stock index futures mean?
The function of stock index futures is to hedge risks. Specifically, institutions have stocks and then sell stock index futures in autumn, so that stocks lose money and futures make money. These two accounts are basically balanced. However, there are also institutions that are speculators. They don't have stocks in their hands, and they also short in the autumn to make money from falling futures. This operation is called naked short selling. Naked means no stock.