OPTION PIT Options for Long Term Trading and Hedging (2016) (Total size: 92.2 MB Contains: 1 folder 8 files)
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Hedging strategies are used by investors to reduce their exposure to risk in the event that an asset in their portfolio is subject to a sudden price decline. When properly done, hedging strategies reduce uncertainty and limit losses without significantly reducing the potential rate of return.
Usually, investors purchase securities inversely correlated with a vulnerable asset in their portfolio.
In the event of an adverse price movement in the vulnerable asset, the inversely correlated security should move in the opposite direction, acting as a hedge against any losses. Some investors also purchase financial instruments called derivatives. When used in a strategic fashion, derivatives can limit investors' losses to a fixed amount.A put option on a stock or index is a classic hedging instrument.
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OPTION PIT Options for Long Term Trading and Hedging (2016) (Total size: 92.2 MB Contains: 1 folder 8 files)
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