Hedged Position

Hedged Position

An investment in which risk is reduced by making an offsetting investment. There are a large number of hedging strategies that one can use. For example, one may take a long position on a security and then sell short the same security or a similar security. This means that one will profit (or at least avoid a loss) no matter which direction the security's price takes. A hedged position may reduce risk, but it is important to note that it also reduces profit potential.
References in periodicals archive ?
This type of accounting is required when a hedged position is not measured at fair value with recognition of gains/losses in income in accordance with regular GAAP.
The taxpayer would then hold the hedged position until a future tax year, and eventually cover it with the low-basis long position.
However, taking into account MCV's projected financial performance and sizable but declining hedged position, Fitch cannot ignore the possibility of a voluntary bankruptcy.
In aggregate, Fitch views SMUD's liquidity as adequate, especially given its substantial hedged position of natural gas over the next two years.
NYSE:APL) (the "Partnership") announces that the hedged position on the Appalachian natural gas production it transports for Atlas America, Inc.
Nasdaq:ATLS) (the "Company") announces that it has increased its natural gas hedged position to 5.
While we are comfortable with our hedged position on commodities through the first quarter of 1997, the Company will continue to monitor market conditions, particularly in the area of foreign exchange rates, to maximize unit distributions".
In addition, Fitch will be looking for a demonstrated ability to effectively manage commodity risk exposure especially in light of its increased price risk exposure for its Illinois assets as well as the need to manage LSP's hedged positions.
In addition, the fund's use of hedging techniques may limit the opportunity for gain if hedged positions appreciate in value.
The company's hedged positions have saved customers approximately $20 million for November's supplies alone and are estimated to generate total savings of almost $140 million this winter versus the current market prices.
While MCV has hedged positions for its natural gas volumes, this position declines over time, and continued higher natural gas prices would further erode the plant's cash reserves.