Why futures are sold when shares are purchased and vice versa? Explain logic or give example.
1 Replies
mohit
(CA)
(31 Points)
Replied 06 December 2017
In order to mitigate the loss which may arise in the transaction, For example a wheat farmer is afraid of wheat price falling in the near future, so he will sell wheat futures now, so if the price of the wheat actually falls then the said can be mitigated by squaring off wheat futures.
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