To shelter one's self from danger, risk, duty, responsibility, etc., as if by hiding in or behind a hedge; to skulk; to slink; to shirk obligations.
To reduce the risk of a wager by making a bet against the side or chance one has bet on.
An investment strategy used to limit risk and protect against market volatility by making transactions that oppose existing positions or by taking an offsetting position in a related security.
An investment made in order to reduce the risk of adverse price movements in a security, by taking an offsetting position in a related security.
The technique of making offsetting commitments to minimize the impact of contrary adverse movements.
The act of locking in a known purchase or sale price for a future contract to protect against an adverse movement in the underlying price. E.g. gold producers hedge against falls in the gold price by selling before metal is produced, while a manufacturer may hedge against an increase in costs of materials, (gold), by buying ahead of the actual need for the metal.
An offsetting position used to limit risk or loss.
To use the futures market to reduce the price risks inherent in buying and selling cash commodities. For example, as an elevator operator buys cash grain from farmers, he can hedge his purchases by selling futures contracts; when he sells the cash commodity, he purchases an offsetting number of futures contracts to liquidate his position.
Buying or selling a futures contract for protection against the possibility of a price change in the physical commodity one is planning to buy or sell.
a transfer of risk that typically involves offsetting a position with either the purchase or sale of options
Any combination of long and/or short positions taken in securities, options or commodities where one position tends to reduce the risk of the other.
A transaction which reduces or offsets the risk of a current holding.
The buying and selling of offsetting market positions.
A transaction to eliminate or reduce the risk of price fluctuations.
Protection against future currency movements.
a risk management technique used to manage commodity price, interest rate, foreign currency exchange or other exposures arising from regular business transactions. Financial Terms
A term used to describe reducing risk by using various investment strategies.
A position or operation that offsets an underlying exposure. For example, a forward currency hedge uses a forward currency contract to offset the exposure of an underlying position in a foreign currency. Hedges reduce the total variability of the combined position.
a) (Noun) An investment position taken up to counteract the risk of another position, eg. the purchase of a put option to offset potential losses from ownership of physical stock; b) (Verb) To take up such an investment positon.
A technique of protecting one’s business, assets or business transactions from adverse changes in market prices or rates. The basic principle of hedging is to take an equal but opposite position on the market. Derivatives, such as futures and options, are also commonly employed to reduce the risk of a transaction. Hedging is widely used in merchandise, commodities, foreign exchange and securities transactions for security rather than speculative purposes. Français: Protéger/Couverture Español: Cobertura
Strategy used to offset investment risk. A hedge reduces or eliminates the possibility of future gain or loss.
A financial strategy designed to reduce investment risk and potential portfolio volatility using call and put options, shor t selling and future contracts.
The initiation of a position in one market or contract to protect against a similar or equal position in another or related market or contract.
See Buy Hedge or Sell Hedge Hedging - The use of futures and options to reduce risk of price movement by establishing the opposite position of what an individual or corporation plans to do with a particular physical commodity in the future. An example would be a corn farmer that planted corn in May, sells a contract of Dec Corn futures on June 10, to offset risks of prices moving lower into the fall because he would be selling harvested corn in the future.
To offset, or a security that has offsetting qualities. For example, an "inflation hedge" would rise in value as inflation rises, counterbalancing the eroding qualities normally expected from inflation.
This is a transaction that is entered into to offset possible losses related to a second transaction or business. It works to protect against fluctuations in the price of goods, securities, exchange rates, and others (e.g. operate simultaneously on futures and stock exchanges to offset possible losses).
A strategy used by investors to offset or reduce the risk associated with an investment or group of investments.
To offset risk. In the foreign exchange market, hedgers use the forward market to cover a transaction or open position and thereby reduce exchange risk. The term applies most commonly to trade.
A hedge involves taking a futures position opposite, but equal in size to, a cash position. The price movement of one position tends to offset the other because futures and cash prices tend to move in the same direction. This means that a loss in value of the cash position will be offset by a gain in the futures position. Hedging merely reduces the risk of price fluctuations that can affect the value of a commodity.
A strategy used to offset investment risk. A perfect hedge is one eliminating the possibility of future gain or loss. It involves purchasing a derivative security (i.e. option or future) in order to reduce or neutralize all or some portion of the risk of holding another security.
A transaction that is used to offset risk.
A hedge is typically accomplished by making approximately offsetting transactions that will largely eliminate one or more types of risk. Hedging Investors can use derivatives and covered warrants to hedge investments. For instance, if an investor owns a particular stock, he or she can neutralize the impact of an impending fall in price by buying a put option, selling futures or buying a put warrant.
The limitation of risk in the event that investments do not perform as expected. In the futures context, to hedge is to take a futures position 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 as a temporary substitute for a cash transaction that will occur later.
An investment that attempts to reduce or completely offset the risk of adverse price movements in a security.
A commitment or investment made with intention of minimizing the impact of adverse movements in interest rates or securities prices and offsetting potential losses.
a transaction initiated with the specific intent of protecting an existing or anticipated physical market exposure from unexpected or adverse price fluctuations.
is to counter- invest so that losses in one thing are made up for by gains in another.
In purchasing, any purchase/sale transaction having the elimination of the negative aspects of price fluctuations. Also, inventory-building actions taken by the purchasing organization to protect from supply constrictions.
A means to reduce the risk of a specific financial loss by balancing a potential risk with an opposing potential gain.
any technique designed to reduce or eliminate financial risk; for example, taking two positions that will offset each other if prices change
minimize loss or risk; "diversify your financial portfolio to hedge price risks"; "hedge your bets"
a futures or option transaction or position that normally represents a substitute for transactions to be made or positions to be taken at a later time in a physical marketing channel
a method of reducing the risk of a position
an insurance strategy to protect yourself from a possible exchange loss by purchasing some instrument that would give you a corresponding gain if the loss-making situation arises, or by locking into a fixed exchange rate
an investment made to offset the risk incurred by entering another investment
an investment transaction undertaken to offset the risk to another investment
a reasonably priced alternative, but it may take time to grow to a mature size
a risk which is taken to offset another risk
a side bet that prices will fall, done with options or futures
a strategy to defend against financial loss, particularly if you have an overly concentrated position
a tool we use to reduce risk in the Fund
a transaction or series of transactions that eliminates a person's risk of loss due to changes in market prices
a way companies can reduce their risk relative to volatile commodities by setting a fixed price for future delivery
a way of reducing your losses if prices move against you while limiting your gains if prices move favorably
Investing to reduce the risk of a position in a security or commodity, normally by taking the reverse position in a related security. For example, owning 10,000 shares of XYZ at 100 may be hedged by owning 100 puts of XYZ with a strike price at 98.
An attempt to offset one investment by buying a security such as an option or future that will move in the opposite direction of the original investment. Most hedges are imperfect since a perfect hedge would result in absolutely no gain or loss.
A hedge is a transaction that reduces risk in an overall asset /liability position, whether this is effected through a long or short futures or options position.
An investment made with the intention of minimizing the impact of adverse movements in interest rates or securities prices.
Any purchase or sales transaction having as its purpose the elimination of profit or loss arising from price fluctuations; specifically, a purchase or sale entered into for the purpose of balancing, a sale or purchase already made, or under contract, in order to offset the effect of price fluctuation.
A risk management technique used to neutralize/manage interest rate or foreign currency exchange exposures arising from normal banking operations.
A strategy to reduce investment risk, usually involving taking a position in a security which has a negative price correlation to the investment, such that a fall in the value of the investment will result in an increase in the value of the security.
A position or combination of positions designed to reduce the risk of the primary position.
A combination of two or more securities into a single investment position for the purpose of reducing or eliminating risk.
To cover a foreign exchange exposure through an offsetting transaction.
A tactic that reduces the risk of an investment.
Risk management strategy that allows a producer to lock in a price for a given commodity at a specified time.
To take a position (ie buy or sell) in the futures market as a means of reducing price risk in the physical market
An investment position held to offset the risk of another position. For example a currency hedged international shares or fixed interest fund protects investors from the risk of currency fluctuations and removes any benefit of a falling Australian dollar.
For a security or portfolio of securities, offsetting trading positions designed to mitigate the risks associated with the securities.
A protective type of investment that lets you guard against the risk of loss from price fluctuation.
Hedgers are individuals and firms that make purchases and sales in the futures market solely for the purpose of establishing a known price level--weeks or months in advance--for something they later intend to buy or sell in the cash market.
To minimise or protect against the loss of, by counterbalancing one investment, against another. Also known as hedging.
Active management of price risk using the various derivative products available.
Is the act of protecting a position. Hedges can be either Long or Short. Hedges are often done with derivative products. A Long Hedge refers to a position whereby a derivative contract is purchased to protect against a short actual position. A Short Hedge is a position whereby a derivative is sold to protect against a long actual position.
Hedging is to protect oneself from currency fluctuautions.
An investment position or combination of positions that reduces the volatility of your portfolio value. One can take an offsetting position in a related security. Instruments used are varied and include forwards, futures, options, and combinations of all of them.
A technique designed to reduce or eliminate risk. Often refers to the use of derivative financial instruments to offset changes in interest rates, currency exchange rates or commodity prices, although many business positions are "naturally hedged" (for example, funding a U.S. fixed-rate investment with U.S. fixed-rate borrowings is a natural interest rate hedge.)
A strategy used to limit investment loss by making a transaction that offsets an existing position.
A conservative strategy used to limit investment loss by effecting a transaction, which offsets an existing position.
A position established with the specific intent of protecting an existing position.
The purchase or sale of options or futures contracts as a temporary substitute for a transaction to be made at a later date. Usually it involves opposite positions in the cash or futures or options market.
is an investment designed to help protect against losses in another investment or position. For example, if you hold a large portfolio of stocks that you fear will lose value in the months ahead, but you cannot sell, you can buy investments designed to go up as stocks decline. Put options or specialized mutual funds provide some of the most common vehicles.
Used to reduce risk by taking a financial derivative position offsetting an existing or anticipated future change in a physical market.
The purchase or sale of a futures contract as a temporary substitute for a cash market transaction to be made at a later date. Usually it involves opposite positions in the cash market and futures market at the same time. (See long hedge, short hedge.)
A strategy used to reduce financial risk, or the possibility of loss. For example, an investor owning 100 shares of the Nasdaq 100 (QQQ), could hedge that long position by owning a short position, or one put option.
A strategy used to reduce risk exposure by making a transaction to offset the risk of the existing position.
To use financial instruments to mitigate the risk of a particular investment. For example, one could hedge one's exposure to an employer's stock by buying a put option on that stock.
A transaction that reduces the risk on an existing investment position.
A technique of reducing risk by taking positions which tend to move in opposite directions.
A strategy used by fund managers to limit investment risk.
Protection of purchases and sales against price movements
Holding two contrary positions in two or more financial instruments in order to offset a loss in one by a gain in the other.
To reduce risk by taking a position in the futures market that is equal or opposite to an existing or anticipated cash position; shorting a security in which a long position has been established.
A conservative strategy used to limit investment loss by making a transaction that will offset a current position.
Reducing the risk of loss by taking a position through options or futures opposite to the current position they hold in the market.
An investment made to minimize the impact of adverse movements in interest rates or securities prices.
The buying or selling of offsetting positions in order to provide protection against an adverse change in price. A hedge may involve having positions in the cash market, the futures market and/or the options market.
A strategy used to offset a particular risk. For example, a hedge against inflation is a strategy designed to make sure that inflation does not erode the purchasing power of your money.
An investment position adopted to counter-act, or at least reduce, the risk of another position. As a form of insurance, the term is common in futures and foreign exchange markets or whenever a risk-management technique is used to protect against future price variations. Practicing this form of investment is called hedging, and contrasts with speculating.
An investment that gives protection - against inflation, for instance, or currency risks
Hedging is the purchase or sale of currency in order to reduce the risk of future currency price fluctuations. See our article Currency exchange - hedge your bets
The generic term describing the risk management concept of taking suitable action to either reduce or eliminate risk using various instruments such as forward contracts, futures, options or swaps etc.
A transaction to protect against fluctuation of foreign exchange rates by locking in a future exchange rate.
A way of covering a risky investment by buying its opposite.
Action taken against the possibility of loss caused by a change in prices e.g. by buying raw materials in advance of having to supply the finished goods.
Industry, tax and regulatory definitions of what constitutes a hedge differ. Broadly, the industry standard is that a hedge reduces risk in the overall asset /liability position, whether this be effected through a long or short futures or options position. However, UK regulators tend to regard only short hedges as hedges, with long hedges being classed as portfolio management.
An offsetting transaction (e.g. the purchase or sale of a future contract or option) designed to lessen the impact of adverse movements in the value of assets.
A protective measure intended to reduce the risk of loss from price fluctuations in a transaction.
A fairly complex money market instrument the simple purpose of which is essentially to insure a mortgage lender (or borrower, through a protected or split-term mortgage) against interest rate movements. In the lender's case the price of this insurance will vary depending upon many political and economic factors, but will generally be lower when interest rates and the economy are less volatile. The buyer on the other hand can hedge at no cost, or at a reasonable rate premium by using specifically designed products.
The initiation of a position in a futures or options market that is intended as a temporary substitute for the sale or purchase of the actual commodity. For example: the sale of futures contracts in anticipation of future sales of cash commodities as a protection against possible price declines, or the purchase of futures contracts in anticipation of future purchases of cash commodities as a protection against the possibility of increasing costs. Back to the Top Intrinsic Value — The actual value of the precious metals contained within a bullion bar or coin.
The act of investing to reduce the risk of a position in a security (typically the risk of adverse price movements), normally by taking a protective position in a related security.
To make a bet that takes the opposite side of your original position, usually to reduce risk or lock in some profit.
An investment strategy used with the intention of offsetting investment risk including movements in interest rates or securities prices.
A buy or sell agreement for a future date that protects the holder against price fluctuations.
Hedging is a buying or selling of foreign currency transaction that reduces the risk of future currency price fluctuations.
Any purchase or sale of a good or security, having as its purpose the elimination of possible profit or loss arising from price fluctuations.
Reduce financial risk through protective purchases in investments that will offset the risk.
A position or combination of positions that reduces the risk of your primary position.
A financial contract entered into to manage commodity price risk.
A financial strategy that reduces the risks from one security or other investment by buying or selling others.... more on Hedge
(Coffee Market) Trading futures contracts against contracts for physical commodities in order to fix a price and thus ensuring against market fluctuations.
Making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of protecting a position in a related security, such as offsetting a futures contract.
A method of protection against future currency exchange rate fluctuations.
A protection against possible loss.
methods of protecting a client's portfolio from a falling market.
An investment strategy designed to reduce the risk of future value changes by entering into a position with an offsetting risk profile. Interest rate swaps, futures, options and short sales are examples of hedging techniques. Certain hedges that meet very specific criteria are accorded special accounting treatment as described in Note 1: Summary of Significant Accounting Policies. An economic hedge is a hedge that mitigates risk, but does not qualify or is not designated as an accounting hedge.
An asset or derivative whose market risk offsets the risk in another asset held or liability.
When a portfolio is invested to give protection from adverse circumstances such as currency movements.
futures or options transaction motivated by the wish to reduce risk.
a means of protecting commodity sellers against price fluctuations. The seller (or cooperative) makes a futures contract for sale of the amount of the commodity he or she expects to deliver to guard against unfavorable movement in price at the time for delivery. At the time for delivery, the seller will make a purchase contract to offset the previous sales contract, with the effect that any movement in contract price is countered by the actual sale of the commodity, and the seller's original futures sale contract price is secured.
A strategy used to offset investment risk. In investing, hedging involves the purchase of an offsetting position, such as a put option or futures contract, to guard against the risk of a market decline. Often used as a defensive strategy in portfolios investing in securities to reduce the negative effects of unfavourable moves in currency exchange rates.
An investment made to reduce the risk of holding another investment. It involves taking an offsetting position in a related asset
A transaction that reduces the risk of an investment.
A protective maneuver; a transaction intended to reduce the risk of loss from price fluctuations.
An investment strategy designed to reduce investment risk, usually involving the undertaking of one investment activity in order to offset the potential loss of another.
The application of a hedging instrument of which the objective is to reduce or eliminate the impact of fluctuations in the price of foreign exchange, interest rates or commodities on an organisation's profits or corporate value.
To take offsetting risks.
Hedging is a strategy of reducing risk by offsetting investments with investments of opposite risk. Risks must be negatively correlated in order to hedge each other; for example, an investment with high inflation risk and low immediate returns with investments with low inflation risk and high immediate returns. Long hedges protect against a short-term position and short hedges protect against a long-term position. Hedging is not the same as diversification, as it aims to protect against risk by counterbalancing a specific area of risk.
A measure used to offset losses or potential losses. For example, gold and oil often are used as investments to hedge, or offset, inflation.
The sale of futures contracts or purchase of put options, to prevent a loss in the event of a market decline.
The purchase or sale of a futures contract or other derivative as a temporary substitute for a cash market transaction to be made at a later date. The hedge position is designed to protect the investor from temporary price movements in an instrument that the investor already owns or plans to own.
Taking an investment position in which some investments are designed to offset the risk of others.
To minimize or protect against the loss of by counterbalancing one transaction, against another. An investment made in order to reduce the risk of adverse price movements, by taking an offsetting position such as an option. Example: "Selling Hedge (or Short Hedge) is selling futures contracts to protect against possible decreased prices of commodities." The initiation of a position in a futures or options market that is intended as a temporary substitute for the sale or purchase of the actual commodity. The sale of futures contracts in anticipation of future sales of cash commodities as a protection against possible price declines, or the purchase of futures contracts in anticipation of future purchases of cash commodities as a protection against the possibility of increasing costs.
A term to describe protective maneuvering by an investment manager to reduce the risk of a loss from a specified event.
The use of almost opposite direction securities, instruments, or futures contracts as a method of attempting to reduce market risk. A perfect hedge is one that eliminates the prospects of any future gains or losses. Investors frequently try to hedge against inflation by purchasing assets (e.g, gold) that will rise in value faster than inflation.
To reduce one's risk of loss by compensating transactions on the other side. For example, buy goods for future delivery priced in a foreign currency. Hedge by buying the foreign exchange needed at the rate then in effect. Or, another way of hedging is to buy a forward exchange contract. In both cases the buyer will have a known cost in its own currency. This is a hedge against the risk of foreign exchange fluctuation; it is not a hedge against a change in the price of the goods.
A position in a derivatives market that is designed to reduce price risk from a physical transaction. For example, the sale of a derivative in anticipation of future sales of physical supplies of oil or gas provides protection against possible declines in the price of the physical commodity.
means of protecting against financial risk.
to hedge is to use strategies for protecting a client's investments from a falling market
In finance, a hedge is an investment that is taken out specifically to reduce or cancel out the risk in another investment. Hedging is a strategy designed to minimize exposure to an unwanted business risk, while still allowing the business to profit from an investment activity. Typically, a hedger might invest in a security that he believes is under-priced relative to its "fair value" (for example a mortgage loan that he is then making), and combine this with a short sale of a related security or securities.