Futures hedging can be divided into long hedging and short hedging.
Long hedging: a futures trading method in which traders buy futures in the futures market first [1] to avoid economic losses when buying in the spot market in the future. Therefore, it is also called "long hedging" or "short hedging".
Short hedging: also known as selling hedging, refers to a futures trading method in which traders sell futures in the futures market first, and when the spot price falls, the profit in the futures market makes up for the loss in the spot market, thus realizing the value preservation. Short hedging is a trading method to sell contracts equivalent to the spot quantity in the futures market in order to prevent the risk of spot price falling during delivery. Hold short positions to hedge the spot that traders will sell in the spot market. Therefore, selling hedging is also called "short selling hedging" or "selling hedging".
Hedging method:
1. Sales hedging of producers:
As a provider of social goods, both farmers who provide agricultural and sideline products to the market and enterprises that provide basic raw materials such as copper, tin, lead and oil to the market can adopt the transaction mode of selling hedging to reduce the price risk, that is, selling the same amount of futures as the seller in the futures market to ensure the reasonable economic profits of the goods they have produced or are still selling to the market in the future, so as to prevent the price from falling and suffering losses when they are officially sold.
2. The operator sells the hedging:
For the operator, the market risk he faces is that when the goods are not resold after being acquired, the price of the goods will fall, thus reducing his operating profit and even causing losses. In order to avoid this market risk, operators can use the method of selling hedging to carry out price insurance.
3. Comprehensive hedging of processors:
For processors, market risks come from buyers and sellers. He is worried about rising raw material prices and falling finished product prices, and even more afraid of rising raw material and finished product prices. As long as the materials and finished products that the processor needs can be traded in the futures market, he can use the futures market for comprehensive hedging, that is, buying the purchased raw materials and selling the products, which can relieve his worries and lock in his processing profits, thus specializing in processing and production.
The role of hedging:
Enterprise is the cell of social economy. What, how much and how to produce and operate with their own or mastered resources are not only directly related to the production economic benefits of the enterprise itself, but also to the rational allocation of social resources and the improvement of social economic benefits. The key to the correctness of enterprise's production and management decision lies in whether it can correctly grasp the market supply and demand state, especially whether it can correctly grasp the next changing trend of the market. The establishment of the futures market not only enables enterprises to obtain the supply and demand information of the future market through the futures market, but also improves the scientific rationality of the enterprise's production and operation decision-making, and truly determines the production on demand. It also provides a place for enterprises to avoid market price risks through hedging, which plays an important role in improving the economic benefits of enterprises.
Hedging strategy:
In order to better achieve the purpose of hedging, enterprises must pay attention to the following procedures and strategies when conducting hedging transactions.
(1) Adhere to the principle of "equality and relative". "Equality" means that the commodities traded in futures must be the same as those traded in the spot market in terms of types or related quantities. "Relative" refers to the opposite buying and selling behavior in two markets, such as buying in the spot market, selling in the futures market, or vice versa;
(2) Spot transactions with certain risks should be selected for hedging. If the market price is relatively stable, there is no need to hedge, and the hedging transaction needs a certain fee;
(3) Comparing the net risk amount with the hedging cost, and finally determining whether to hedge;
(4) According to the short-term price trend forecast, calculate the expected change of basis (that is, the difference between spot price and futures price), and make the timing plan for entering and leaving the futures market accordingly, and implement it.
Stock index futures hedging
Stock index futures can be used to reduce or eliminate systemic risks. The hedging of stock index futures can be divided into selling hedging and buying hedging. Selling hedging refers to the hedging of stock holders (such as investors, underwriters, fund managers, etc.). ) avoid the stock price decline in the futures market. Buying hedging refers to the hedging conducted by individuals or institutions (such as companies that intend to subscribe for shares and merge with another enterprise) to avoid the stock rise in the futures market. The steps of using stock index futures to preserve value are as follows:
First, calculate the total market value of the shares held.
Second, calculate the number of contracts required for hedging according to the futures price in the maturity month. For example, holding 20 kinds of stocks on the same day, with a total market value of $65,438+029,000, the price of a futures contract on the maturity date is 65,438+030.40, and the amount of a futures contract is 65,438+030.40x500 = 65,200. Therefore, it is necessary to sell two futures contracts.
Third, the maturity date is closed at the same time to achieve hedging.