One of the broadest uses of futures is hedging, used by managers of large funds.
Hedging (from the English hedge — fence, hedge) — opening transactions in one market to compensate for the impact of price risks of an equal and opposite position in another market. Hedging is usually carried out in order to insure the risks of price changes by concluding transactions on futures markets. The most common type of hedging is hedging with futures contracts.
Consider an example of hedging.
Let’s say you decide to buy 100 shares of Sberbank (for hedging you need to take a commensurate number of lots for futures) for 130 rubles in the hope of growth. Unexpectedly for you, the market began to sink, and you would now like to sit out the fall with a minimum of losses, but wanting to leave the purchased shares and receive dividends. In this case, you need to sell the required number of futures in parallel (if 1 futures is equivalent to 100 lots of Sberbank shares, then you need to sell 1 futures). Now, if the shares you bought sink bringing a loss, then a short on futures gives an equivalent profit. You don’t lose anything else and keep your 100 shares of Sberbank. It is urgently necessary to sell futures if the stock price goes up and futures begin to give a minus on the account or add money to the futures account to cover the increasing GP. With a strong drop in stock prices, you can make an additional feint by selling futures with a large profit and using the money that appeared to buy cheaper shares!