Hedger

A hedger holds an underlying position (physical commodity, equity portfolio, currency exposure) and uses futures to lock in a price or offset adverse moves. For a hedger, futures are insurance — they trade the opposite side of their physical exposure.

Examples: a pension fund long equities sells ES futures to reduce beta in volatile markets; an airline buys CL futures to cap fuel costs; a gold miner sells GC futures to secure revenue at current prices before production.

Hedgers are typically less price-sensitive than speculators — they accept a known cost (basis risk, roll cost) to avoid an unknown loss on the underlying.