short hedge

(redirected from Selling Hedging)

Short hedge

The sale of futures contracts to eliminate or lessen the possible decline in value of an approximately equal amount of the actual financial instrument or physical commodity. Related: Long hedge.

Short Hedge

The sale of a futures contract or option on a security or commodity one owns in order to hedge against the risk of decline in its price. In a short hedge, the price of the futures contract or option should move inversely to the price of the underlying asset. It is also called a selling hedge.

short hedge

An investment transaction that is intended to provide protection against a decline in the value of an asset. For example, an investor who holds shares of Nextel and expects the stock to decline may enter into a short hedge by purchasing a put option on Nextel stock. If Nextel does subsequently decline, the value of the put option should increase.