undertaking one investment to protect against the potential loss in another investment Options and futures are often used to hedge an investment
A strategy employed in a futures market to reduce risk Hedging is used to reduce the risk of loss through adverse movements in interest rates, equity markets, share prices or currency rates It has become an accepted risk management tool
any technique designed to reduce or eliminate financial risk; for example, taking two positions that will offset each other if prices change
The purchase or sale of a derivative security (such as options or futures) in order to reduce or neutralize all or some portion of the risk of holding another security
The simultaneous initiation of equal and opposite positions in the cash and futures markets Hedging is employed as a form of financial protection against adverse price movement in the cash market
is a method of transferring price exposure to the futures contracts’ underlying cash component associated with a commercial enterprises’ business process The entity transferring that unwanted price exposure is referred to as the hedger A speculator is the entity that accepts the exposure to the price moves Speculators assume the price risk transferred by the hedgers and provide liquidity that leads to reliable price discovery in the futures market
A hedging transaction is a purchase or sale of a financial product, having as its purpose the elimination of loss arising from price fluctuations With regards to currency transactions it would protect one against fluctuations in the foreign exchange rate (see Forward Contract)
A strategy designed to reduce investment risk using call options, put options, short-selling, or futures contracts A hedge can help lock in profits Its purpose is to reduce the volatility of a portfolio by reducing the risk of loss
A strategy designed to reduce investment risk using call options, put options, short selling, or futures contracts A hedge can help lock in existing profits Its purpose is to reduce the volatility of a portfolio, by reducing the risk of loss
Dealing in such a manner as to reduce risk by taking a position that offsets an existing or anticipated exposure to a change in market prices You are therefore attempting to lock in the profit/loss on the position at the current level
Taking a position in a futures market opposite to a position held in the cash market to minimize the risk of financial loss from an adverse price change; a purchase or sale of futures contract as a temporary substitute for a cash transaction that will occur later (i e , long hedge and short hedge) Hedgers use the futures markets to protect their business from adverse price changes
The practice of offsetting the price risk inherent in any cash market position by taking an equal but opposite position in the futures market Hedgers use the futures markets to protect their business from adverse price changes See Selling (Short) Hedge and Purchasing (Long) Hedge
Taking a position in a futures market opposite to a position held in the cash market to minimize the risk of finanical loss from an adverse price change; a purchase or sale of futures as a temporary substitute for a cash transaction that will occur later
The use of financial instruments, such as futures contracts, to offset the risk in an investment portfolio, as an increase in the value of the hedging instrument will offset declines in the other assets
A strategy designed to reduce investment risk using call options, put options, short selling or futures contracts A hedge can help lock in existing profits Examples include a position in a futures market to offset the position held in a cash market, holding a security and selling that security short and a call option against a shorted stock A perfect hedge eliminates the possibility for a future gain or loss An imperfect hedge insures against a portion of the loss BACK TO TOP
The practice of offsetting the price inherent in any cash market position by taking the opposite position in the futures market Hedgers use the market to protect their businesses from adverse price changes
A strategy designed to reduce investment risk using "call" options, "put" options, "short" selling, or futures contracts A hedge can help lock in existing profits Its purpose is to reduce the potential volatility of a portfolio, by reducing the risk of loss However, many hedging strategies also surrender the chance for further gain
The purchase or sale of a derivative security (such as options or futures) in order to reduce or eliminate risk associated with undesirable price changes of another security