However…
You don’t have any rice, and also you suppose the value of rice goes to go down. How do you make a revenue from that?
Suppose there’s a buddy or a lender who has an present stock of rice (and due to this fact at present lengthy). His rice is simply sitting there whereas he waits for the value to go up.
You borrow 1 kg of rice from him, at 0 % curiosity for this instance (since you might be nice associates, you belief one another, and all that) and enter a contract to return 1 kg of rice to them at a future date.
You’re taking the borrowed rice and promote it available in the market on the present market worth of 10 {dollars}. You at the moment are wanting the rice you borrowed, ought to they ask you for it.
When the value of rice goes right down to 9 {dollars}, you purchase again 1 kg of rice on the market worth of 9 {dollars} and return it to your buddy or lender. Leaving 1 greenback remaining with you — your revenue.
If the value of rice went as much as 11 {dollars} whilst you have been wanting it, and the lender requested for it to be returned, you would need to purchase it on the 11 {dollars} worth. The 1 greenback paid out of your pocket is your loss.