Buying Hedge

AAA

DEFINITION of 'Buying Hedge'

A transaction that commodities investors undertake to hedge against possible increases in the prices of the actuals underlying the futures contracts.

INVESTOPEDIA EXPLAINS 'Buying Hedge'

Also called a long hedge, this particular strategy protects investors from increasing prices by means of purchasing futures contracts. Many companies will attempt to use a long hedge strategy in order to reduce the uncertainty associated with future prices.

RELATED TERMS
  1. Legacy Hedge

    A hedge position that a company holds for an extended period ...
  2. Bear Spread

    1. An option strategy seeking maximum profit when the price of ...
  3. Bull Vertical Spread

    An bullish strategy used by investors who feel that the market ...
  4. Steve Cohen

    A trading magnate also referred to as the Hedge Fund King and ...
  5. David Tepper

    A legendary investor who specializes in distressed debt and manages ...
  6. David Einhorn

    Known for his short selling strategy, activist investor David ...
Related Articles
  1. Stock Safety: Top 3 Ways to Limit Your ...
    Options & Futures

    Stock Safety: Top 3 Ways to Limit Your ...

  2. Applying Binary Options To Equity Markets
    Options & Futures

    Applying Binary Options To Equity Markets

  3. Can You Buy Stock Insurace? 3 Strategies ...
    Options & Futures

    Can You Buy Stock Insurace? 3 Strategies ...

  4. How The Price Of Stock Futures Is Calculated
    Options & Futures

    How The Price Of Stock Futures Is Calculated

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center