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Published On: Thu, Apr 4th, 2013

Hedging

A hedge is an investment strategy used to attempt to offset any potential losses.

One way an investor can do this is to either sell futures on a stock they own, stating they will sell that stock at a certain price. A partial hedge is a hedge that partially covers your stock position, but not all of it. An investor might undertake a partial hedge if they are concerned about the risk of their position, but still want to be able to benefit from possible upward movement. A neutral hedge is a strategy that combines positions across various investments in order to generate risk-free return on investments even if there are small changes in the underlying assets.

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.

 

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