hedging and cfs

Discussion in 'SP5' started by dimitris13, Jan 15, 2020 at 9:38 PM.

  1. dimitris13

    dimitris13 Ton up Member

    hi ,
    it mentions that if we are due to sell an asset we can hedge this with entering a short futures position. then it says at the end that we close the position by emtering a long one.
    1. is it possible to explain me the steps using some example including "actual" cfs?
    2. why chose to close out the position ?

  2. Colin McKee

    Colin McKee ActEd Tutor Staff Member

    A good example of closing out a position is in chapter 2 page 6. A trader would close out a position when he or she no longer wants the exposure from that trade, but there would be many real world situations when a trader might decide that an exposure should be closed.

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