Hedging strategy is a strategy to trade in the stock index futures market and the stock market with the same number and opposite directions at the same time, and to lock in the profits or costs obtained through the break-even of the two markets, so as to avoid the systematic risks in the stock market.

The specific practice of hedging strategy is that investors who already hold stock portfolios expect the stock market to face downside risks, but it is difficult to sell their stocks quickly in a short time, so they can choose to short a certain number of stock index futures in the futures market. If the market falls, the gains of stock index futures trading can make up for the loss of stock portfolio decline, thus achieving the purpose of dispersing the risk of stock market decline.