Financial Derivatives MBA Lecture 6 | Hedging with Futures

How do you hedge a stock position with futures? This lecture explains why traders hedge, the short hedge and long hedge, a worked Infosys example with net profit and loss at different prices, and how a stock portfolio is hedged with Nifty futures. Financial Derivatives (KMBFM005), Lecture 6 for MBA 2nd Year. We start with the question "Why hedge?" and compare the three choices an investor has when the market may fall: take no action, sell and buy back later, or hedge the position. Then we cover the basic hedging strategies with futures, solve a single-stock hedging example (250 shares of Infosys, short futures at ₹2,285, lot size 250) and show that the net P&L stays almost the same whatever the price. We end with hedging a portfolio using Nifty futures and the idea of systematic and unsystematic risk. 📚 Topics covered: Meaning of hedging and why hedge Option 1: take no action (why a 25% fall needs a 33.33% rise to recover) Option 2: sell and buy back later Why hedging makes sense Short hedge and long hedge Hedging a single stock position: Infosys example Short futures trade details: futures price, lot size and contract value Net P&L of the spot position and the short futures at different prices Hedging a stock portfolio with Nifty futures: systematic and unsystematic risk Portfolio beta example ⏱️ Chapters: 0:00 Welcome 0:11 Introduction 4:12 Hedging: meaning and why hedge? 7:13 Option 1: take no action 9:40 Option 2: sell and buy back later 10:53 Why hedging makes sense 12:29 Hedging a single stock position 15:17 Basic strategies: short hedge 15:54 Long hedge 17:53 Hedging a single stock position: Infosys example 21:56 Short futures trade details 24:08 Net P&L at different prices 29:47 Hedging a stock portfolio 35:34 Portfolio beta example 🎯 Who is this for? MBA / PGDM and finance students, commerce students, and anyone learning derivatives from scratch. ◀️ Previous lecture (Lecture 5: Forward vs Futures): [paste link] ▶️ Next lecture: [paste link] 📋 Full Financial Derivatives playlist: [paste link] 📎 Source of examples and slides: [credit the original source if used] 👨‍🏫 About the teacher: Vivek Singh Rana, Assistant Professor (Finance). Finance lectures for MBA and BBA students. 👍 If this lecture helped, like the video, subscribe to the channel, and share it with your classmates. Ask your doubts in the comments and I'll reply. #HedgingWithFutures #FinancialDerivatives #MBA