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.
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References in periodicals archive ?
The company said it saw a 6% tailwind from acquisitions, divestitures and structural items for Q2 comparable net revenues, and a 4%-5% currency headwind based on the current rates and including the impact of hedged positions. For FY19, it saw EPS growth of (1%)-1% versus $2.08 in 2018 in comparable EPS from continuing operations, with approximately 4% growth in organic revenues, and 12%-13% growth in comparable currency neutral net revenues, including an 8%-9% tailwind from acquisitions, divestitures and structural items.
We note continued investor interest on open futures contract with tenors ranging from eight to12 months which may indicate hedged positions taken by foreign investors in the fixed income market,' Some Lagos-based investment banking firms agreed in their weekly market assessment.
Many of Dubai's jewellery retailers are now taking advantage by moving away from the conventional "fixed positions" -- or "hedged positions" -- to keeping "open positions" for their day-to-day sourcing requirements for their outlets.
After the company buys back roughly 20% of the shares that were tendered by shareholders, investors will end up with 100% hedged positions.
On the one hand, several types of transactions are eligible as hedged positions, including anticipated transactions.
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.
An option exposure to a period t interest rare is hedged with an instrument that also has exposure to the period t interest rate there is no basis risk in hedged positions. Using this assumption, we calculate a separate hedge ratio for each maturity's exposure.
GUIDANCE: When Coca-Cola reported its fourth earnings on February 14, the company gave Q1 guidance, saying it saw a comparable net revenues tailwind of 6%-7% from acquisitions, divestitures and structural items, along with a 6%-7% currency headwind based on the current rates, including the impact of hedged positions. The company also gave fiscal year 2019 guidance, saying it saw FY19 comparable continuing operations earnings per share growth of (1%)-1% year-over-year, along with approximately 4% growth in organic revenues, and 12%-13% growth in comparable currency neutral net revenues.
The company updated second quarter and full year 2018 expectations for currency based on current rates and including the impact of hedged positions. The company now expects the currency headwind to second quarter comparable net revenues (non-GAAP) to be in the range of 0% to 1% and expects the full year 2018 currency headwind to comparable net revenues (non-GAAP) to be in the range of 0% to 1%.