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Buy hedge |
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Buy hedgeSee: Long hedgeBuy hedge Similar MatchesCovered or hedge option strategiesCovered or hedge option strategiesStrategies that involve a position in an option as well as a position in the underlying stock, designed so that one position will help offset any unfavorable price movement in the other, including covered call writing and protective put buying. Related: Naked strategies Inflation hedgeInflation hedgeInvestments designed to hedge against inflation and the loss of purchasing power associated with it. Delta cross hedgeDelta cross hedgeA futures hedge that has both maturity and currency mismatches with an underlying exposure. HedgeHedgeA strategy employed in the futures, options and warrants markets to reduce risk.Traditionally a commodity producer (say, a cocoa grower) would agree to sell his goods at a stated price at a stated time in the future, and the user of the commodity (say, a chocolate manufacturer) would agree to buy them. By agreeing on a price, quantity and delivery date, they introduce certainty into their operations and reduce risk. For the producer, the risk would be that prices drop, and for the processor that they would rise.The same strategy carries over into the financial markets. Options and warrants can be used to hedge a portfolio position. In the case where shares have been sold, for example, the purchase of equivalent call options (the option to buy shares) means that if the shares rise in price, a corresponding rise in the value of the option will offset the notional loss expected on the underlying shares. Hedge qualityHedge qualityMeasured by the R-square in a regression of spot rate changes on futures price changes. Further SuggestionsHedge fundCurrency hedge Commercial hedgers Neutral hedge Money market hedge Aggressive Growth Hedge Fund Hedged tender Hedge clause Hedge wrapper Hedged portfolio Perfect hedge hedge ratio Additional hedge Short hedge Delta hedge hedge funds Hedge Hedge Sell hedge |
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