(1) risk avoidance

Because stock index futures and stock index spot are the same subject matter, affected by the same economic factors and supply-demand relationship, the price trend is the same. As the expiration date of futures contracts approaches, prices tend to converge. Therefore, investors can avoid risks by hedging, that is, operating in the stock market and stock index futures market in the opposite direction.

Stock index futures provide a hedging tool for the stock market through short selling and short selling mechanism. For example, investors who are worried about the decline of the stock market can hedge the systemic risk of the overall decline of the stock market by selling stock index futures contracts and avoid collective selling of the stock market; Worried that the stock market will rise and the cost of opening positions will increase, you can also lock in the efficiency of funds by buying stock index futures.

(2) price discovery

Stock index futures have the function of discovering prices and reflect the future stock index trend. Because there are many participants in stock index futures trading, the market price reflects the comprehensive views and information of all parties on price expectations; The low transaction cost, high leverage margin and efficient trading mode of stock index futures make the price of stock index futures sensitive to information and convey the judgment of the whole market participants on the future market trend anytime and anywhere; The real-time quotation of stock index futures provides participants in the stock spot market with the basis for discovering the future market level, which reflects the evaluation relationship between the future stock index and the current stock spot index under the action of market arbitrage mechanism.

(3) Asset allocation

The introduction of short-selling mechanism makes investors' investment strategy change from a single mode of waiting for the stock price to a two-way investment mode, and investors' funds can also make a difference instead of being passively idle in the market decline; In the rising market, when investors are optimistic about certain stocks, if they buy them in the secondary market, they will undoubtedly need a lot of cash, and the sub-index futures contracts that buy such stocks can fully share the gains of such stocks and earn market profits with less cash. Therefore, this strategy can help investors change the asset structure and improve the overall rate of return on assets.

Stock index futures can be invested separately, or combined with stock spot and index stocks to form portfolio investment, which can promote the asset redistribution of social idle funds in various listed companies and industries, increase market liquidity and improve the efficiency of fund use. Institutional investors can adjust the asset ratio between stocks and bonds with the help of stock index futures, thus optimizing asset allocation and strengthening risk management.