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Hedging

Hedging		A strategy designed to reduce investment risk using call options, put options, short-selling, or futures contracts. Its purpose is to reduce the volatility of a portfolio by reducing the risk of loss; it can help lock in profits.

Related Terms
		Diversification Spreading one's assets across a wide variety of investments within a portfolio to minimize the impact of any one security on ... Hedge A term for reducing the risk of one position by taking other positions with options, futures or other derivatives. A transaction that ... Derivatives Derivatives are financial instruments whose value is based on the market value of an underlying asset such as a stock, bond, ...

 

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