The number of stock index futures contracts required for hedging = spot quantity ÷ contract value;

Stock index futures contract value = futures index × contract multiplier

Hedging is to use the hedging ratio to calculate the number of futures contracts needed to hedge the spot.

Hedging, also known as hedging transaction, refers to the fact that traders sell (or buy) the same number of futures trading contracts as hedging in the futures exchange while buying (or selling) the actual goods. It is an act of temporarily replacing physical transactions with futures transactions in order to avoid or reduce the losses caused by unfavorable price changes.