Net Result of Hedge

What this video covers

• Why a hedge's net result is always the cash-market result plus the futures-market result, never the futures leg in isolation
• How a short hedger (producer) adds the futures gain to a depressed cash sale price to lift the net result
• How a long hedger (processor) subtracts the futures gain from an elevated cash purchase price to pull the net cost down
• Why a losing futures position inside a hedge is normal by design, not evidence of a failed hedge
• How basis is always computed as cash minus futures, and why only the ending basis matters for the net-result cross-check
• Why initial futures price plus ending basis equals net result, giving you a calculator-independent verification on test day
• Which direction of basis movement helps the seller versus the buyer, and how to run the machine backwards when the exam gives net result first