Money market hedging refers to the trading activities in which an enterprise designates one or more hedging instruments to avoid foreign exchange risk, interest rate risk, commodity price risk, stock price risk and credit risk. , so that the fair value or cash flow of the hedging instrument changes, and it is expected to offset all or part of the fair value or cash flow change risk of the hedged item.

Theoretical basis of hedging: the trend of spot and futures markets is similar (under normal market conditions), because these two markets are affected by the same supply and demand relationship, and their prices rise and fall together; However, due to the opposite operation of these two markets, the profit and loss are also opposite, and the profit of the futures market can make up for the loss of the spot market. The trading principles of hedging are as follows:

Spot market futures market

In July, the soybean price was 20 10 yuan/ton, and the transaction was 10 lot. September soybean contract: the price is 2080 yuan/ton.

Soybean sold in September100t: price 1980 yuan/ton; In September, I bought 10 lot of soybeans: the price is 2050 yuan/ton.

Arbitrage results in a loss of 30 yuan/ton and a profit of 30 yuan/ton.

The final net profit is 100*30- 100*30=0 yuan.

Arbitrage, also known as hedging profit, refers to a foreign exchange transaction that uses the difference of short-term interest rates in different countries or regions to transfer funds from countries or regions with lower interest rates to countries or regions with higher interest rates for investment, so as to obtain spread income from them. Futures market arbitrage refers to buying and selling two different futures contracts at the same time.