- offsetting a hedge
- For a short hedger, to buy back futures and sell a commodity. For a long hedger, to sell back futures and buy a commodity. Also called lifting a hedge. Chicago Mercantile Exchange Glossary
Financial and business terms. 2012.
offsetting a hedge
Look at other dictionaries:
hedge — / hej/ vi hedged, hedg·ing: to reduce possible losses in speculative transactions by engaging in offsetting transactions (as futures trading) Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. hedge … Law dictionary
hedge — (1) Verb To reduce risk or behavior that reduces risk from future price movements. (2) Noun A transaction undertaken to reduce risk by offsetting the risk in another transaction. The risk in one position is hedged by counterbalancing it with the… … Financial and business terms
hedge — /hɛdʒ / (say hej) noun 1. a row of bushes or small trees planted close together, especially when forming a fence or boundary. 2. any barrier or boundary. 3. an act or a means of hedging a bet or the like. 4. an investment, fiscal policy, etc.,… …
hedge effectiveness — The extent to which a hedge transaction results in the offsetting changes in value or cash flow that the transaction was and is intended to provide. FAS 133 requires users to regularly assess the effectiveness of hedges. Furthermore, under FAS… … Financial and business terms
Hedge — Making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract. An example of a hedge would be if you owned a stock,… … Investment dictionary
offsetting positions — 1) Taking an equal and opposite futures position to a position held in the cash market. The offsetting futures position constitutes a hedge; 2) Taking an equal and opposite futures position to another futures position, known as a spread or… … Financial and business terms
short hedge — also: selling hedge Selling futures contracts to protect against possible declining prices of commodities that will be sold in the future. At the time the cash commodities are sold, the open futures position is closed by purchasing an equal… … Financial and business terms
Macro-Hedge — An investment technique used to eliminate the risk of a portfolio of assets. In most cases, this would mean taking a position that offsets the whole portfolio. But this technique is difficult in practice because there is rarely one asset that… … Investment dictionary
Rolling Hedge — A strategy for reducing risk that involves using the high levels of liquidity typically present with exchange traded futures and options in order to achieve a continual risk offsetting position. A rolling hedge is done by closing out existing… … Investment dictionary
purchasing hedge or long hedge — Buyer futures contracts to protect against a possible price increase of cash commodities that will e purchased in the future. At the time the cash commodities are bought, the open futures position is closed by selling an equal number and type of… … Financial and business terms
