What is Hedge?
To hedge is to take a position that offsets possible losses in another investment, much like insurance.
Why it matters
A farmer selling futures to lock in a crop price is hedging. Hedges reduce risk but also cost money or limit gains.
Hedge
Related terms
Futures Contract
A futures contract is an agreement to buy or sell an asset, such as oil, gold or an index,…Put Option
A put option gives its holder the right, but not the obligation, to sell a stock at a set…Diversification
Diversification is spreading your money across many different investments so that no…General education, not investment, tax or legal advice. Read our disclosures.