Hedging
Hedging & Trading
Hedging & Trading explains what futures are for. How a farmer, an airline or a portfolio manager uses them to lock in a price, and where those hedges fail. How spreads, trading sessions and order types work, how to read the CFTC's Commitments of Traders report, what managed futures funds do, and why commodity ETFs that hold futures can trail the commodity itself. Mechanics, never recommendations.
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How Hedging With Futures Works
Short and long hedges explained with real contract specs: how a hedge locks in a price, how to size it with a hedge ratio, and why basis risk means no hedge is perfect.
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How Farmers and Airlines Hedge With Futures
Worked examples of a Canadian canola grower and an airline buying jet fuel, with real contract specs, plus what went wrong in the 1996 hedge-to-arrive crisis and airline fuel hedging.
Read the explainer →Futures Spread Trading: Calendar, Crack and Crush Spreads Explained
How futures spreads work: calendar spreads, inter-commodity spreads, the crack and crush spreads with real contract math, how exchanges quote them, and why margin is lower but risk is not zero.
Read the explainer →Futures Trading Hours and Order Types: Sessions, Settlement Times and Stops
Why futures trade nearly 24 hours, how a trading day and settlement time are defined, which order types CME Globex supports, and why stop orders can fill far from your price in fast markets.
Read the explainer →The Commitments of Traders (COT) Report: How to Read It and Its Limits
What the CFTC's weekly Commitments of Traders report shows, the Legacy, Disaggregated and TFF categories, how to read the numbers with a worked example, and what the report cannot tell you.
Read the explainer →Managed Futures and Trend Following: What the Evidence Says
How CTAs and trend-following funds use futures, how a simple time-series momentum rule and volatility sizing work, and an honest look at the evidence, including 2008, 2022 and the weak 2010s.
Read the explainer →Futures ETFs Explained: Roll Costs, the USO 2020 Episode and Leveraged Funds
How commodity ETFs hold futures, why roll costs make them drift from spot prices, what USO's SEC filings show about April 2020, and how leveraged funds reset daily.
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