Hedging Strategies
Hedging Strategies | Definition
(1) The temporary purchase and sale of a contract calling for future delivery of a specific quantity of a particular commodity at an agreed-on price to offset a present (or anticipated) position in the cash market.
(2) An operation intended to protect against loss in another operation. It involves selling short to nullify a previous purchase, or buying long to offset a previous short sale. The operator is in a neutral position, since profits made on one side of the market cancel losses showing on the other side.
(3) 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.
For over 1,000 additional terms and definitions please see our Investment Glossary Guide.
Related to Hedging Strategies:
- Geographical Hedge Fund Guides
- Hedge Fund Employment Guide
- Financial Certification
- Investment Book
- Hedge Fund Terms and Definitions
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