The best way to understand hedging is to think of it as a form of insurance. When people decide to hedge, they are insuring themselves against a negative event's impact on t… See more

Every hedging strategy has a cost associated with it. So, before you decide to use hedging, … See more

The majority of investors will never trade a derivative contract. In fact, most buy-and-holdinvestors ignore short-term fluctuations altogether. For these investors, there is little point in eng… See more

A classic example of hedging involves a wheat farmer and the wheat futures market. The farmer plants his seeds in the spring and sells his harvest in the fall. In the intervening … See more