There are many strategies and combinations for hedging. Here are a few simple examples to illustrate them.

A domestic export company wants to sell a batch of goods abroad one month later, but because the exchange rate is not constant and the price is agreed, the company buys short foreign exchange positions at the corresponding price. After maturity, if foreign exchange rises, the loss of short positions will be offset by the income from commodity sales. If foreign exchange falls, the loss of goods sold is hedged against the gain of short positions.

This is spot and futures hedging.

Investors buy established futures and at the same time buy homogeneous or strongly related futures short positions. If the given futures price falls, the short position gains of homogeneous or strongly correlated futures hedge the losses of the given futures price, and if the given futures price rises, the gains hedge the short position losses of homogeneous or strongly correlated futures.

This is futures hedging.

Investors buy established futures and sell options for established futures. If the maturity price rises, they will benefit from the delivery of the established futures instead of exercising the put option, which will invalidate their maturity. If the maturity price falls, they will drive put options and buy established short futures positions, and the income of established short futures positions will hedge the loss of established futures prices.

This is futures option hedging.

In fact, there are many similarities between hedging and arbitrage, but the main purpose of hedging is to reduce risks through opposite transactions.