- Hedge
- A transaction that reduces the risk of an investment. The New York Times Financial Glossary
* * *
something that gives you protection against a financial risk, for example futures (= agreements to buy or sell currencies etc on a fixed date in the future at a fixed price) or option S (= rights to buy or sell currencies etc at a particular price within a particular period of time or on a particular date in the future):• They decided that diesel fuel for the company's trucks would rise by at least 10 cents a gallon, and have done some forward buying as a hedge.
hedge against• Investors often buy precious metals as a hedge against inflation.
1. FINANCE if you hedge a financial risk, you protect yourself against it, for example with futures (= agreements to buy or sell currencies etc on a fixed date in the future at a fixed price) or option S (= rights to buy or sell currencies etc at a particular price within a particular period of time or on a particular date in the future):• I've never hedged currencies before. But I could see the dollar was getting lower, and I hedged for the first time, betting that the dollar would rise.
• Northwest Airlines saved more than $7 million in fuel costs because it hedged 4.2 million gallons of its fuel purchases for each month by buying futures contracts.
— hedging noun [uncountable] :• Manufacturers have been doing more hedging because they expect prices for copper to rise.
• sophisticated currency hedging techniques
2. hedge your bets to reduce your chances of failure or loss by having several choices available to you:• Promoters, uncertain whether losing weight was going to stay popular, hedged their bets by advertising that their products could help you add weight or reduce it.
if you hedge against, or hedge yourself against, a financial risk, you protect yourself against it by hedging:• Consumers of a raw material can hedge against price movements through the futures markets.
• Many companies have not hedged themselves against a rising yen.
• Although invested in Europe, they weren't sufficiently hedged against currency changes.
* * *
Ⅰ.hedge UK US /hedʒ/ noun [C] FINANCE, STOCK MARKET► an investment made in order to reduce the risk of losing money on shares, bonds, etc. that you own, for example, by buying futures (= agreements to sell shares for a particular price at a date in the future) or options (= the rights to buy or sell shares for a particular price within a particular time period): »These formulas are devised to tell the bank what kind of hedges to purchase to provide the best possible protection of its assets.
a hedge against sth »In recent years, investors have also bought gold as a hedge against US dollar weakness.
»inflation hedges
Ⅱ.hedge UK US /hedʒ/ verb [I or T]► FINANCE, STOCK MARKET to reduce the risk of losing money on shares, bonds, etc. that you own, for example by buying futures (= agreements to sell shares for a particular price at a date in the future) or options (= the rights to buy or sell shares for a particular price within a particular time period): »European airports have been attracting investors keen to hedge long-term pension liabilities.
»We don't tend to hedge at all - in either stock or bond funds.
hedge against sth »Companies can hedge against currency movements, but many choose not to.
hedge risk/exposure »Airbus has hedged enough of its dollar exposure that a major short-term impact is unlikely.
Financial and business terms. 2012.
