With the trend of the stock index futures trading market becoming better, more and more people are paying attention to the situation of the stock index futures trading market, because stock index futures can reduce the systemic risk of the stock market through hedging operations. Its main role, according to the purpose of entering the stock index futures market, investors in the stock index futures market can be divided into three categories: hedges, arbitrageurs and speculators.
Hedging refers to the use of futures contracts on the stock index futures trading market that are equal to the value of the spot position but in the opposite direction to avoid institutions or individuals with large fluctuations in spot prices.
Stock index futures have good liquidity and low transaction costs, which can be used to reduce or eliminate systemic risks. In the stock index futures trading market, when investors realize that there may be greater systemic risk in the market, they can use stock index futures for hedging. In general, stock index futures and stock spot prices are affected by the same factors, and the direction of change is basically the same. Therefore, as long as investors establish a position in the stock index futures trading market that is opposite to the stock spot market, when the market price changes, the losses in one market can be hedged by the profits in the other market. By calculating the appropriate hedging ratio, the approximate balance between loss and profit can be achieved, thereby achieving the purpose of hedging.
Hedging of stock index futures can be divided into selling hedging and buying hedging. Selling hedging refers to the hedging performed by stock holders (such as long-term investors, etc.) to sell contracts in the stock index futures market in order to avoid asset damage caused by falling stock prices; buying hedging refers to preparing to hold stocks In order to avoid the rise in share prices caused by rising stock prices, individuals or institutions buy and maintain the value of contracts in the futures market.
Arbitrage refers to the use of stock index futures trading markets and stock spot markets (current arbitrage), different stock index futures markets (inter-market arbitrage), different stock index futures contracts (inter-product arbitrage), or different delivery months of the same product (inter-temporal arbitrage) ) The unreasonable relationship between the price and the institution or individual who earns the difference in price by buying and selling at the same time.
Arbitrage is very important for the stock index futures trading market. On the one hand, through futures arbitrage, the price of stock index futures and the stock index will maintain a reasonable relationship. On the other hand, arbitrage behavior helps to improve the liquidity of the stock index futures market. The existence of arbitrage behavior not only increased the trading volume of the stock index futures market, but also increased the trading volume of the stock market. The improvement of market liquidity is conducive to the normal implementation of investors’ normal transactions and hedging operations.
Speculators refer to those institutions or individuals who specialize in buying and selling stock index futures contracts on the stock index futures market, that is, buying when they are bullish and selling when they are bearish.
Speculative trading of stock index futures refers to the determination of holding long or short positions based on judgments on the future trend of stock index futures prices. Because the leverage of stock index futures meets the needs of speculators, speculators are willing to bear the risk of hedging transfers in order to obtain spread benefits. Therefore, in the stock index futures market, there are some speculators who specialize in stock index futures trading. Their risk tolerance is strong. The purpose of buying or selling stock index futures contracts is not to avoid economic losses caused by changes in the price of the stock portfolios they hold, but to obtain stock index futures prices when they rise or fall. The resulting spread profit.
No matter what kind of stock market investors are for profit, although it is said that under the hedging of stock index futures, the stock market generally does not experience large fluctuations, but there are many factors affecting the stock and stock index futures markets. In addition to having the necessary theoretical knowledge, you also need to have rich experience, a keen sense of smell, and extraordinary courage. Of course, you must have the ability to withstand failure. It is the so-called “wealth in wealth insurance”, high returns and high risks This is exactly the charm of the stock market!