short hedge

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 number and type of futures contracts as those that were initially sold. The practice of offsetting the price risk inherent in any cash market position by taking an equal but opposite position in the futures market. Hedgers use the futures markets to protect their business from adverse price changes. Chicago Board of Trade glossary
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When a hedger has a long cash position (is holding an inventory or growing a crop) he enters a short hedge by selling a futures contract. A sell or short hedge is also known as a substitute sale. The CENTER ONLINE Futures Glossary
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The sale of futures contracts to eliminate or lessen the possible decline in value of an approximately equal amount of the actual financial instrument or physical commodity. Related: long hedge. Bloomberg Financial Dictionary
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The sale of a futures contract in anticipation of a later cash market sale. Used to eliminate or minimize the possible decline in value of ownership of an approximately equal amount of the cash financial instrument or physical commodity. See hedge. Chicago Mercantile Exchange Glossary
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A transaction which involves the sale of a futures contract which is used to hedge a long cash market position ( long position; cash market). Such a transaction seeks to ensure that any decrease in the cash price on the subsequent cash market sale is offset by a profit on the futures position. Sometimes described as a producer's hedge. Dresdner Kleinwort Wasserstein financial glossary

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   The sale of a futures or option position to protect against a fall in price in the corresponding cash market. Losses in holdings of cash instruments or commodities will be offset by the profits from the futures or options which can be realized by meeting those obligations at the new lower price of the future of option. Opposite of long hedge.
   ► See also Cash Markets, Futures, Hedging, Option.

Financial and business terms. 2012.

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