Hedging techniques generally involve the use of financial instruments known as derivatives. Two of the most common derivatives are options and futures. With derivatives… See more

Every hedging strategy has a cost associated with it. So, before you decide to use hedging, you should ask yourself if the potential benefits justify the expense. Remember… 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. A farmer plants their seeds in the spring and sells their harvest in the fall. In the intervening … See more