Hedging Calculations: Rapid Fire

What this video covers

• Why a hedger's net result is always the cash-market result plus the futures-market result, and why a losing futures leg by itself does not mean the hedge failed
• How to compute a short futures gain (initial futures price minus buy-back price) versus a long futures gain (sell price minus initial buy price)
• The net-price shortcut that collapses both legs into one formula: net price equals initial futures price plus ending basis
• Why the ending basis (cash minus futures at lift) is the only basis that matters, and how to ignore the opening basis bait on exam questions
• The directional sign rule: a short hedger (seller) adds a futures gain to the cash sale, while a long hedger (buyer) subtracts a futures gain from the cash purchase
• How a strengthening basis can still be negative, and why moving from 10 under to 5 under raises the seller's net even though the basis stays below zero
• The exact sequence for applying a round-turn brokerage commission: compute net price first, then subtract from the seller's net or add to the buyer's net last