prashantsahni

2 differences. Assuming you are talking about the same equity position to be converted into cash
Method 1, is an instantaneous hedge, in the sense it acts as a hedge from the time you enter into the Futures contract. Any upside you gain from Beta in you lose because of the short Future contracts leaving you with Zero Beta exposure. Any portfolio with Zero beta is basically Cash.
Method 2, is when you set up a hedge from effect in the future (T periods). The amount of Future/Forward contracts needed in the future will be different than required at present.