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short hedge

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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
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.

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