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Selling hedge
The sale of futures or forwards, or the purchase of put option contracts to protect against the risk of a reduction in the price of a specific asset or derivative.
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, whereas 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.
Translations
Synonyms and variations
- Sell hedge
- Short hedge