Hedging (hedging of price risks)

Hedging is the term used to describe price risks that may arise in business transactions as a result of exchange rate movements, price fluctuations in securities or changes in raw material prices.

As a rule, hedging is sought through a forward transaction. Example: A farmer fears that potato prices could fall sharply before harvest, while the current potato price seems fair and decent to him. If he is now able to sell his potato harvest, which he does not yet have, to a buyer in advance at the current price with a delivery date after the harvest, he has hedged his price risk. The buyer speculates that the potato prices will not fall but, on the contrary, will rise. He can then sell the farmer's harvest for a profit on the date.

In der Praxis wird bei Termingeschäften vor allem mit sogenannten Futures, Optionen oder Optionsscheinen gehandelt.

Hedging (a hedge is a protective hedge or a shelter) is the addition of futures contracts, futures and other derivatives to the portfolio of the company with the intention that these financial contracts have an opposite performance than the positions already held by the company due to its operational business, and thus offset their price or market risks.

Was the explanation to "Hedging (hedging of price risks)"Helpful? Rate now:

Weitere Erklärungen zu Anfangsbuchstabe "H"