Hedged Position

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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 ?
On the one hand, several types of transactions are eligible as hedged positions, including anticipated transactions.
Hedge accounting in this case consists of simply departing from the usual treatment of hedged positions so that they may be accounted for in the same manner.
Another procedure, called a cash flow hedge, consists in temporarily charging unrealized gains and losses on hedging positions to "other comprehensive income" until they can be transferred to net income as soon as the offsetting losses/gains on the hedged positions are themselves realized in net income.
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.
Due to the hedged positions in their portfolios, hedge funds did not participate fully in January's run-up.
The fair value (marked-to-market) of derivatives or hedged positions, even those embedded in contracts must be shown on the balance sheet; and hedging efficiencies must be accounted for.
However, when the market does decline, those hedged positions can preserve capital while the market indices and long-only investments fall unchecked.