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Buying hedge
The purchase of futures, forwards or call option contracts to protect against the risk of an increase in the price of a specific asset or derivative.
In a long hedge, the trader seeks to protect against the risk of an increase in the price of an underlying that the trader does not own, but intends to buy later or on which it is already short, whereas in a short hedge, the trader seeks to protect against the risk of a reduction in the price of an underlying that the trader owns, but intends to sell later.
Translations
Synonyms and variations
- Buy hedge
- Long hedge