Using the hedging ratio, we can calculate the number of futures contracts needed to hedge the spot. The calculation formula is: the number of stock index futures contracts required for hedging = spot quantity ÷ contract value; The calculation formula of contract value is: contract value of stock index futures = futures index × contract multiplier.
Hedging ratio: Hedging ratio refers to the ratio between the total value of futures contracts and the total value of insured spot contracts when establishing trading positions in order to avoid the spot market risk of fixed-income bonds. Determining the appropriate hedging ratio is the key to reduce the risk of cross-hedging and achieve the best hedging effect.
Hedging rate refers to the ratio between the total value of futures contracts determined by hedgers when establishing trading positions and the total value of insured spot contracts, so as to achieve ideal hedging effect.
In the process of futures trading, although the change range of futures price and spot price will not be exactly the same, the change trend is basically the same. That is, when the spot price of a specific commodity tends to rise, its futures price tends to rise, and vice versa.
The role of hedging
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 futures market not only enables enterprises to obtain the supply and demand information of the future market through futures market.
Improving the scientific rationality of enterprise's production and operation decision, truly fixing production according to demand, providing a place for enterprises to avoid market price risks through hedging, and playing an important role in improving enterprise's economic benefits.