Saturday 10 September 2011

What does it mean to "hedge"?

"Hedging" roughly means managing risk. Typically, a money manager employs a particular hedging technique in order to mitigate a particular type of risk. For instance, market risk - the risk of a decline in the overall market - can be hedged against by selling a broad collection of securities short in equal proportion to one's long exposure. The same end could also be accomplished by buying put options on an index like the S&P500. Other types of risk often hedged against include interest rate, inflation, and large weightings in a sector, region, single company, or currency. Tools and techniques of hedging include: raising cash, selling short, buying or selling options, futures, commodity and/or currency futures, etc.

hedging strategies,hedging plants,hedging principle,currency hedging,definition of hedging,fuel hedging,delta hedging,forex hedging,country hedging,hedging techniques
 

No comments:

Post a Comment