Introduction to Futures _ Futures _ Sina Finance

Selling hedging is a trading method that is used to sell contracts with the same quantity as the spot in the futures market in order to prevent the risk of the spot price falling at the time of delivery. Usually when farmers are trying to prevent harvesting, crop prices fall; To prevent the price of minerals from falling after mining; The hedging method adopted by dealers or processors to prevent the price from falling when goods are purchased but not sold.

For example, during spring ploughing, a grain enterprise signed a contract with farmers to purchase 10000 tons of corn during harvest that year. In July, the enterprise was worried that the price of corn would fall during harvest, so it decided to lock the selling price at 1080 yuan/ton. Therefore, it sold 1000 contracts at 1080 yuan/ton in the futures market for hedging.

By the time of harvesting, the price of corn had indeed dropped to 950 yuan/ton, and the enterprise sold spot corn to the feed factory at this price. At the same time, the futures price also fell to 950 yuan/ton. The enterprise bought back 1000 futures contracts at this price to hedge the position. The 130 yuan/ton earned by the enterprise in the futures market was just used to offset the underpaid part in the spot market. In this way, they avoided the risk of adverse price changes through hedging.

buy hedge

Buying hedging refers to a hedging method in which a trader first buys futures in the futures market so that he or she will not cause economic losses due to price rise when he or she buys cash in the spot market in the future. This practice of hedging the loss of the spot market with the profit of the futures market can fix the forward price at the expected level. Buying hedging is a commonly used hedging method for investors who need spot commodities but are worried about price rise.

Selective hedging

In practice, the main purpose of hedging in the futures market is to increase their profits, not only to reduce risk. If they think hedging their inventory is the best way to take action, they should do so. If they think that only partial hedging is sufficient, they may only take hedging actions against some of the risks. In some cases, if they are confident in their judgment on the future trend of prices, they can expose all risks without taking any hedging action.

Feed enterprises have owned soybean meal in the whole process from signing the spot purchase contract of soybean meal to selling the feed. Once the contract price is determined, risks will follow. This is because the market price is constantly changing. If the price falls, the enterprise will suffer losses. After the purchase manager signed the spot contract, he was worried about the price decline and panicked. However, in order to meet the needs of factory production, he must have some inventory. What should he do now? The futures market can help you. You can sell hedging in the futures market to avoid price risk, and sell hedging for inventory (spot purchase contract). If a feed enterprise buys soybean meal at the price of 2050 yuan/ton, and the processing and sales period is three months, then the enterprise is worried about the price decline, then it should do sales hedging in the futures market.

Another function of selective hedging is to lock in speculative profits. Suppose that a feed enterprise ordered spot soybean meal at 1980 yuan/ton in March, and the delivery time is three months later. He was convinced that the price was relatively low, and expected that the price of soybean meal would rise after January. By April, the price of soybean meal had risen to 2180 yuan/ton, which the processing enterprise thought was too high. He speculated that the price of soybean meal would fall to 2060 yuan/ton. Assuming that his prediction is completely accurate, if he has always held the initial spot contract without any change in the middle, he will eventually get a net income of 80 yuan per ton. In fact, he earned 200 yuan/ton first, and then lost 120 yuan/ton. In an elastic hedging scheme, he can sell soybean meal futures at the price of 2180 yuan/ton to preserve the value of spot contracts of soybean meal, thus earning 200 yuan/ton. The enterprise sold soybean meal futures through the futures market for hedging, and locked in profits on the premise of retaining the spot control of soybean meal.

The purchase manager's comprehensive judgment on the market price and price trend is the basis of whether, when and how much the raw material inventory needs to be sold for hedging. Compared with futures speculation, hedging is much more complicated. First, spot enterprises must hedge according to their own production and operation needs, and cannot confuse hedging with speculative transactions; Secondly, we should strictly control the volume of futures trading, which should not exceed the range that enterprises can bear; Third, a detailed hedging plan and operation plan should be formulated, and the basis, seasonality, variety characteristics and other factors should be fully considered in the plan. In addition, before starting hedging, you should attend a training class on hedging, or find some more in-depth teaching materials to read, so as to understand the operation of hedging in depth.

previous page next page