long hedge

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Long hedge

The purchase of a futures contract in anticipation of actual purchases in the cash market. Used by processors or exporters as protection against an advance in the cash price. Related: hedge, short hedge

Long Hedge

The purchase of a futures contract with the intention of accepting delivery of the underlying asset. One conducts a long hedge in order to lock in a price for an asset one must purchase in the future. This protects the holder of the futures contract from volatility in the underlying asset's price. If the spot price of the underlying asset moves in a direction more beneficial for the holder, he/she can sell the futures contract and buy the asset at the spot price. An example of a long hedge is a situation in which a company needs to buy oil by June. The spot price of oil may be $70 per barrel, but the futures price for June delivery may be only $60. The company would choose to buy the futures contract at $60 per barrel. A long hedge is also called a buy hedge.

long hedge

The purchase of a futures contract or call option to protect a short position against possible increases in the prices of commodities, currencies, indexes, or securities. For example, an investor might purchase a futures contract on fixed-income securities to protect against a decline in interest rates. Also called buying hedge.
References in classic literature ?
Lucy hurried out of the room, but Maggie did not take the opportunity of opening her book; she let it fall on her knees, while her eyes wandered to the window, where she could see the sunshine falling on the rich clumps of spring flowers and on the long hedge of laurels, and beyond, the silvery breadth of the dear old Floss, that at this distance seemed to be sleeping in a morning holiday.
These large and increasing stocks will not only up the likelihood of additional commercial short hedges, but will also encourage the commercials to defer long hedges," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
Long hedges are used in the automotive industry to guard against commodity price increases.
Long hedges are used to protect against increasing values in the cash market.
Short hedges are also called bear hedges or sell hedges and long hedges are called bull hedges or buy hedges.
Table 5-4 shows how they could long hedge that risk.
The long hedge example in Table 5-9 illustrates that the feed manufacturer has forward sold feed for delivery in two weeks with the price of corn fixed at $2 per bushel.
Large amounts of cuttings ( from long hedges or tall conifers ( can be gathered in an optional extra volume bag attached by a tube to the Groom.