Hedging

v. surround with a hedge; put up a boundary, enclose; evade, avoid; avoid making a direct answer or statement

In finance, a hedge is an investment that is taken out specifically to reduce or cancel out the risk in another investment. Hedging is a strategy designed to minimize exposure to an unwanted business risk, while still allowing the business to profit from an investment activity. Typically, a hedger might invest in a security that he believes is under-priced relative to its "fair value" (for example a mortgage loan that he is then making), and combine this with a short sale of a related security or securities. Thus the hedger is indifferent to the movements of the market as a whole, and is interested only in the performance of the 'under-priced' security relative to the hedge.  Holbrook Working, a pioneer in hedging theory, called this strategy "speculation in the basis,"[1] where the basis is the difference between the hedge's theoretical value and its actual value (or between spot and futures prices in Working's time).
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Noun
1. any technique designed to reduce or eliminate financial risk; for example, taking two positions that will offset each other if prices change
(synonym) hedge
(hypernym) security, protection
2. an intentionally noncommittal or ambiguous statement; "when you say `maybe' you are just hedging"
(synonym) hedge
(hypernym) evasion, equivocation
(derivation) hedge, fudge, evade, put off, circumvent, parry, elude, skirt, dodge, duck, sidestep

Noun
1. a fence formed by a row of closely planted shrubs or bushes
(synonym) hedgerow
(hypernym) fence, fencing
(hyponym) privet hedge
2. any technique designed to reduce or eliminate financial risk; for example, taking two positions that will offset each other if prices change
(synonym) hedging
(hypernym) security, protection
3. an intentionally noncommittal or ambiguous statement; "when you say `maybe' you are just hedging"
(synonym) hedging
(hypernym) evasion, equivocation
(derivation) fudge, evade, put off, circumvent, parry, elude, skirt, dodge, duck, sidestep
Verb
1. avoid or try to avoid fulfilling, answering, or performing (duties, questions, or issues); "He dodged the issue"; "she skirted the problem"; "They tend to evade their responsibilities"; "he evaded the questions skillfully"
(synonym) fudge, evade, put off, circumvent, parry, elude, skirt, dodge, duck, sidestep
(hypernym) avoid
(hyponym) quibble
(derivation) hedging
2. hinder or restrict with or as if with a hedge; "The animals were hedged in"
(hypernym) hem in
(verb-group) hedge in
3. enclose or bound in with or as it with a hedge or hedges; "hedge the property"
(synonym) hedge in
(hypernym) enclose, inclose, shut in
4. minimize loss or risk; "diversify your financial portfolio to hedge price risks"; "hedge your bets"
(hypernym) minimize, minimise
(derivation) hedger

(p. pr. & vb. n.)
of Hedge
  

A strategy designed to reduce investment risk using call options , put options, short selling, or futures contracts. A hedge can help lock in existing profits. Its purpose is to reduce the volatility of a portfolio, by reducing the risk of loss.