AREC 384 hedging

• brokers
• hedgers
• speculators

person/firm that handles futures (and options) transactions

person/corporation involved in a business sense in the underlying commodity whose futures contract is being transacted

• professional trader, no direct involvement in underlying commodity but is hoping to profit from the risk-aversion of hedgers
• exploits price variability

risk management strategy that involves taking opposite positions in the futures and cash markets

• begins by selling futures contracts now and buying the contracts later when the goods are sold in the spot market
• "short position" in futures market
• "long position" in cash market

• begins with a person buying futures contracts now and selling the contracts later when the goods are purchased in the spot market
• "long position" in futures market
• "short position" in cash market