Build a Futures Hedge Ratio
Calculate a simple futures hedge count by matching exposure value to contract size.
The setup A $5 million receivable must be converted when EUR/USD may move before payment. The risk is real, but contract count is a unit problem before it is a finance problem. The method Exposure -> contract value -> count -> direction A futures hedge works when contract units, exposure units, and position direction line up. Bad shortcut Divide dollars by a euro face amount A hedge count with a documented residual. A correct hedge ratio is a unit-consistent approximation, not a decorative formula. 01 Exposure 02 Units 03 Rounding Step 1 You see a $5 million receivable due in…
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