Sign in Subscribe

Topic

hedging

A collection of 17 issues

What Is a Put Option? Definition, Examples & Benefits

Introduction to Put Options A put option is a financial contract that gives the buyer the right, but not the obligation, to sell an underlying asset at a predetermined strike price before or on a specified expiration date. In options trading, puts are popular for hedging and for profiting from

Understanding Non-Deliverable Forwards (NDFs): A Complete Guide

What is a Non-Deliverable Forward? A Non-Deliverable Forward (NDF) is a cash-settled, short-term forward contract on a foreign currency that is restricted or illiquid in the international market. Instead of exchanging the notional amounts at maturity, the two parties settle the difference between the agreed forward rate and the prevailing

Interest Rate Swap: Definition, Mechanics, and Benefits

What Is an Interest Rate Swap? An interest rate swap is a contractual agreement in which two parties exchange one set of interest payments for another, based on a defined notional principal and schedule. Typically, a company or financial institution swaps a fixed interest rate for a floating rate (often

Hedging: A Comprehensive Guide to Managing Risk

Understanding Hedging Hedging is a proven risk-management technique used by investors, companies, and traders to protect against adverse price movements in currencies, commodities, equities, and interest rates. By taking an offsetting position, a hedge reduces the impact of unexpected market swings and helps stabilize cash flow, profits, and portfolio value

Understanding Forward Contracts: Definition, Benefits, and Risks

Introduction to Forward Contract A Forward Contract is a customized agreement between two parties to buy or sell an underlying asset at a specified price on a predetermined future date. Unlike standardized futures, a Forward Contract is traded over the counter (OTC), giving participants flexibility to tailor terms such as

Dynamic Hedging: A Practical Guide to Modern Risk Management

What Is Dynamic Hedging? Dynamic hedging is an advanced risk-management technique that continuously adjusts the hedge ratio of a portfolio to offset market movements. Used by option traders, pension funds, and corporate treasurers, it seeks to protect asset value while allowing participation in upside potential. Why Dynamic Hedging Matters Financial

Commodities as an Inflation Hedge: Evidence from the 2020s Supply-Shock Cycle

Introduction: Why Inflation Protection Matters Again The bruising inflation spike that followed the 2020 pandemic, Russia’s invasion of Ukraine, and the resulting energy and logistics crunch revived a classic investment debate: are commodities still a reliable inflation hedge? During the low-inflation 2010s, many investors abandoned exposure to raw materials,

Cryptocurrency Hedging Strategies: Futures, Options Collars, and Correlation Offsets for Portfolio Protection

Introduction: The Volatility Challenge Cryptocurrency markets are famous for their breathtaking rallies and stomach-churning crashes. While that volatility creates opportunities, it also introduces substantial risk for investors and corporate treasuries that hold digital assets on their balance sheet. Hedging strategies borrowed from traditional finance can reduce downside exposure without forcing

Cryptocurrency Market Making Essentials: Inventory Management, Spread Optimization, and Risk Hedging Strategies

Introduction Cryptocurrency markets trade nonstop, span multiple venues, and exhibit bursts of volatility that dwarf most traditional asset classes. In this environment, market makers play a crucial role by continuously quoting buy and sell prices, thereby injecting liquidity and compressing bid–ask spreads. Successful crypto market makers must balance three

Crypto Options Greeks Guide: Using Delta, Gamma, Theta, and Vega for Precision Hedging and Trading Edge

Introduction Crypto options trading has moved from niche to mainstream, powered by sophisticated traders who demand tighter risk control and repeatable alpha. At the heart of that control are the “Greeks” — Delta, Gamma, Theta, and Vega. These metrics quantify how an option’s price responds to movements in the underlying