A hedger in the S&P
500 Index market is an individual who uses the futures market to offset price risk when intending to sell or buy the actual
S&P 500 Index. Hedging is possible because the S&P 500 Index cash prices and S&P 500 Index futures prices tend
to move in the same direction. However, the difference between the cash price and the futures price may narrow or widen. The
change in the difference between the cash price and the futures price is called basis risk. Because of the changing basis
no hedge can be perfect.
Where can you hedge the Dow Jones Index? The Dow
Jones Index can be hedged on the Chicago Board of Trade (CBOT). The CBOT offers a competitive and transparent market place
to engage in efficient hedging strategies. If you are interested in hedging Dow Jones Index please contact
us. One of our experienced
Dow Jones Index traders will be happy to give you a call to discuss hedging strategies with you.
Hedge your Portfolio using Stock Index Futures
Click on the link above to
download a very informative .pdf brochure entitled "Hedge your Portfolio using Stock Index Futures.” It was published
by the Chicago Mercantile Exchange. This is a must read guide for any novice or advanced trader considering a hedge in the index
market using exchange traded Dow Jones Industrial Index futures and options.