Funds that use hedging means are called hedge funds, also known as hedge funds or arbitrage funds. There are many methods and tools for hedging, such as short positions, swap transactions, spot and futures hedging, hedging of basic securities and derivative securities, etc. Hedge funds avoid or reduce risks by hedging, but the results often go against their wishes. Because of the great potential risks, hedge funds are defined as a kind of private equity funds. Rather than the public offering of * * * mutual funds.
Hedge funds use various trading methods to hedge, transpose, arbitrage and earn huge profits. These concepts have gone beyond the traditional operation scope of preventing risks and ensuring returns. In addition, the legal threshold for starting to set up hedge funds is far lower than that of mutual funds, further increasing risks. In order to protect investors, North American securities management institutions have listed them as high-risk investments and strictly restricted the intervention of ordinary investors. For example, It is stipulated that each Hedgefund has less than 1 investors and the minimum investment is 1 million dollars, etc.
After decades of evolution, hedge funds have lost their original meaning of risk hedging, and the title of Hedge Fund is also in vain. Hedge funds have become synonymous with a new investment model, that is, based on the latest investment theory and extremely complicated financial market operation technology, they make full use of the leverage of various financial derivatives to take on high risks. Pursuing a high-yield investment model.
The trading model of hedge funds can be summarized as
1. Stock index futures hedging
Stock index futures hedging refers to taking advantage of unreasonable prices in the stock index futures market, participating in stock index futures and stock spot market transactions at the same time, and trading stock index contracts with different maturities (but close). The behavior of obtaining the difference. Stock index futures hedging can be divided into current hedging, expired hedging, over-market hedging and over-variety hedging.
2. Commodity futures hedging
Similar to stock futures hedging, commodity futures also have hedging strategies. When buying or selling a futures contract, they sell or buy another related contract, and close both contracts at a certain time. The transaction form is somewhat similar to hedging. Hedging The purchase (or sale) of physical objects in the spot market and the sale (or purchase) of futures contracts in the futures market have nothing to do with the sales contracts in the futures market. There are four main types of commodity futures hedging: current hedging, cross-hedging, market hedging and cross-variety hedging.
3. Statistical hedging
is different from risk-free hedging. Statistical hedging is a risk hedging by using the historical statistical law of securities prices, and its risk lies in whether the historical statistical law will exist in the future. The main idea of statistical hedging is to find the most relevant investment varieties (stocks and futures, etc.) first, and then find the long-term equilibrium relationship (coordination relationship) of each investment variety. Start building a warehouse when the price gap of a certain variety (the gap of the coordination equation) deviates to a certain extent-buy the relatively undervalued variety and the relatively overvalued variety. The main contents of statistical arbitrage include stock matching transaction, stock index arbitrage, securities lending arbitrage and foreign exchange arbitrage transaction.
4. Option hedging < P > Option is also called option) Derivative financial instruments generated by futures. In essence, options are pricing rights and obligations in the financial field respectively. The obligor must fulfill whether the assignee of the right trades within the specified time. In option trading, the party who buys the option is called the buyer, and the seller is called the seller. The buyer is the assignee of the right, and the seller is the obligor who must fulfill the buyer's right. The advantage of the option is that the income is unlimited and the risk loss is limited. In most cases, using the option instead of futures for empty and hedging trading has less risk and higher yield than simply using futures hedging.