Spot price volatility and risk management of index futures markets

We use the method of empirical test to study the spot price volatility and advance some innovation in the research design. We consider spot price volatility is different in China and the risk supervision is necessary. On the basis of the application of the wavelet transformation DWT and the model of GARCH (1, 1) empirical test shows volatility enlarges after the introduction of stock index futures while the descriptive statistics inform that the volatility shrinks, explicating the harmful impact on the stock market resulting from the onset of futures contract. After the contract design, the paper researches on risk management of stock index futures contract finally. The investor should notice that the risk and income equates, remain faithful and unyielding, understand the futures, and obey various measure strictly.