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what can I research on the topic of "hedging with stock with index future"?

Can anyone help me? what are the stock index future? Would It be hard to reaserch on this topic? Would there be available information on stock index future?

Public Comments

1. you will find allot of info the thing is your mathematical and analytical skills if they are good then u will be ok and you will have a readership from investors.
2. Yes. There's a lot of it. The brokerage houses have a lot of stuff on it and you can find info in libraries. Stay away from the hype stuff, though. The get-rich-quick schemes usually turn into get-poor-quick schemes. I burned ten thousand there when I had some to burn, and I knew basically what I was doing. I did what I knew from the start I shouldn't do. I sat on it. I was also trying to make fast money. The people who win on the futures market make it 1% to 5% or less at a time, I think, and they stay with it. I had no intention of making it my life. I wasn't hedging. I was speculating. That's gambling. Hedging is when you are putting up a relatively small amount of "insurance" money to cover a much larger investment in more stable financial markets. The futures markets are where contracts for anything from currency, to metals, to farm products, to in this case stock included in one of the indexes (like S&P 100 Index) are bought and sold by auction. Have you ever seen the Chicago "bull pen" commodity trading floors? That's one of the auctions and it looks like a brawl. You buy or sell by blocks (it was 100 shares per block, I think, for that one). You pay a price for the contracts according to what the auction price of the moment is for the delivery date you choose (don't worry, only the real merchants/farmers/manufacturers/miners actually deliver or take delivery). If you are afraid a significant investment in index funds may go down in the near future, you can buy enough index future "puts" (contracts to sell), after you have established a futures account with your broker, to cover that index fund. There are also "calls" (contracts to buy). You can use those as a hedge if you need to sell an investment you think might go up. They work just the inverse of the "puts." They are all contracts to buy or sell at a fixed price, usually the price when the contract is purchased. For example, if you buy futures (put) contracts to sell S&P 100 index fund shares and they are going for $20 per share (as an example) and the shares later drop to $10, you are holding valuable contracts. Everyone wants to buy your contracts because they allow shares to be sold under contract for $20 that now sell on the open market for $10. However, all contracts expire every quarter. If you haven't sold them before then, your contract defaults and your money is gone. Actually, day-by-day it has been eroding all along, unless the demand for your contract has for some reason increased, like the example above. I went on more than I intended but that's a good start. I hope I helped more than confused you. At least you have good background for further study.