What are the hedging transactions of stock index futures?
Specifically, the use of stock index futures to engage in stock hedging is mainly divided into the following five categories:
1 Multi-hedging: If stock buyers are going to buy stocks at a specified time in the future, they can use stock index futures contracts to hedge and establish stock index futures contracts to make up for the loss of stock index futures contracts after the stock price rises.
2 Circulation intertemporal hedging: refers to selling and buying stock index futures contracts in two different months at the same time, so as to make use of the price difference between futures in different months for reverse trading and profit from it. In intertemporal trading, investors are concerned about the price difference between months.
3 Short hedging: If the stock holder predicts that the interest rate will rise in the future, resulting in the stock price falling, he can hedge his own stock by selling the stock index futures contract now, and make up for the loss of the spot stock position with the short profit in the futures market.
4 Cross-market hedging: Cross-market trading of stock index futures means that investors trade two similar stock index futures in opposite directions in two different futures markets at the same time, and profit from the difference.
5 Issue intertemporal hedging: When a company issues shares, it will generally entrust an investment bank to issue them. This kind of issuance also has certain risks. In order to reduce the risk, you can use stock index futures to hedge your value.
Summary: The principle of buying hedging is the same as that of selling hedging, except that selling hedging avoids the downside risk, while buying hedging avoids the stepped risk, both of which achieve the goal of locking the income or cost within the target range. Investors should adjust their hedging strategies in time according to changes in the market.