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A trader who enters the market with the intent to protect a position in the underlying asset; an investor who uses the futures market to minimize the risk in his or her business.

Additional Comments:

Hedgers may be manufacturers, portfolio managers, bankers, farmers, and so on.

Hedgers also use options to protect stock positions. For example, an investor can use a put to hedge a stock or an index put to hedge a stock portfolio.

Related Terms:

Derivatives are financial instruments whose value is based on the market value of an underlying asset ...

Delta Hedge
A strategy designed to protect the investor against directional price changes in the underlying asset by ...

Index Funds
An index fund is a fund that follows a passive investing strategy, meaning that the fund ...

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