For example, suppose you are an aluminum producer and processor. In March this year, the spot price of aluminum was 20430 yuan per ton. Do you think the price of aluminum may rise in the future, and 100 tons of aluminum will be needed in the future? But now your stock is full, and you can't buy raw materials now. However, if you buy aluminum in the future, your cost will be high, so you decide to hedge.

At the beginning of March, you bought 100 tons of aluminum at 2 13 10 yuan per ton. At the beginning of May, the spot market price of aluminum rose to 2 1.030 yuan per ton, which was higher than that in 600 yuan in March. At this time, the futures price rose to 2 1, 9 10 yuan per ton, which was higher than when you bought the contract, 600 yuan.

At this time, you buy the100t aluminum you need in the spot market as planned.

Comparison results: the spot price rose from 20,430 yuan per ton in March to 2 1.030 yuan per ton in May, so the cost when you buy the spot is more than 600 yuan × 1.000 ton = 60,000 yuan (remember that you lost 60,000 yuan).

The futures price rose from 2 13 10 yuan per ton in March to 2 19 10 yuan per segment in May, so the futures price you hold now is higher than when you bought it. 600 yuan x100t = 60,000 yuan (your futures profit).

The extra 60,000 Yuan You you paid when you bought it in cash just hedged your 60,000 yuan futures profit, which completely hedged it.

The essence of hedging: futures profit, spot loss, hedging.

Spot profit, futures loss, hedging.