Buy hedge

Buy hedge

Long Hedge

The purchase of a futures contract with the intention of accepting delivery of the underlying asset. One conducts a long hedge in order to lock in a price for an asset one must purchase in the future. This protects the holder of the futures contract from volatility in the underlying asset's price. If the spot price of the underlying asset moves in a direction more beneficial for the holder, he/she can sell the futures contract and buy the asset at the spot price. An example of a long hedge is a situation in which a company needs to buy oil by June. The spot price of oil may be $70 per barrel, but the futures price for June delivery may be only $60. The company would choose to buy the futures contract at $60 per barrel. A long hedge is also called a buy hedge.
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In order to reduce the risk the issuer is forced to buy hedge, whose price usually neutralizes the advantage of lower nominal interest rates.
9% The larger financial institutions will increasingly buy hedge fund companies 59.
Legg Mason would also buy hedge fund firm The Permal Group, one of the five largest funds-of-hedge-funds managers in the world, for an initial payment of $800 million.