Why hedge? If the price of the asset goes down the firm will lose money when it sells the asset, but gain on the short futures position If the price of the asset goes up, the firm will gain from the sale of the asset, but will take a loss on the futures position Charles cao 33 Charles Cao Why Hedge? ◼ If the price of the asset goes down, the firm will lose money when it sells the asset, but gain on the short futures position ◼ If the price of the asset goes up, the firm will gain from the sale of the asset, but will take a loss on the futures position