| 释义 |
Short Hedge
An investment strategy that is focused on mitigating a risk that has already been taken. The "short" portion of the term refers to the act of shorting a security, usually a derivatives contract, that hedges against potential losses in an investment that is held long (i.e., the risk that was already taken).
If a short hedge is executed well, gains from the long position will be offset by losses in the derivatives position, and vise versa. Investopedia Says:
A common risk in short hedging is basis risk, or the risk of price levels not changing much over the period the hedge is in place; in this scenario, the asset held in the long position would not gain any value, and the short hedge would lose value.
Short hedging is often seen in the agriculture business, as producers are often willing to pay a small premium to lock in a preferred rate of sale in the future. Also, short hedges involving interest rates are common among institutional money managers that hold large amounts of fixed income securities and are concerned about reinvestment risk in the future. Related Terms:
Basis Risk
Futures Market
Hedge
Hedge Ratio
Long Hedge
Notional Value
Reinvestment Risk
Short (or Short Position) |