“In the past couple of years, the U.S. stock market has been volatile. But stock futures are one way to hedge your investments so that no single market fluctuation — way up or way down — will ruin your portfolio.
Single stock futures can be risky investments when purchased as standalone securities. There’s a possibility of losing a significant chunk of your initial investment with only minimal market fluctuations. However, there are several strategies for buying stock futures, in combination with other securities, to ensure a safer overall return on investment.
One of the most effective stock future strategies is called hedging. The basic idea of hedging is to protect yourself against adverse market changes by simultaneously taking the opposite position on the same investment.”