Buying Hedge


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.

BREAKING DOWN '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.

  1. Legacy Hedge

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  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. Swap

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  5. Hedge

    Making an investment to reduce the risk of adverse price movements ...
  6. Convergence

    The movement of the price of a futures contract towards the spot ...
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  1. Can hedge funds trade penny stocks?

    Hedge funds can trade penny stocks. In fact, hedge funds can trade in just about any type of security, including medium- ... Read Full Answer >>
  2. Are hedge funds regulated by FINRA?

    Alternative investment vehicles such as hedge funds offer investors a wider range of possibilities due to certain exceptions ... Read Full Answer >>
  3. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  4. Can hedge fund returns be replicated?

    You can replicate hedge fund returns to a degree but not perfectly. Most replication strategies underperform hedge funds ... Read Full Answer >>
  5. Can foreign investors invest in US hedge funds?

    U.S. hedge funds are open to accredited investors. When they distribute profits to investors, those proceeds are taxed at ... Read Full Answer >>
  6. Do hedge funds manipulate stock prices?

    Some economics professors think there is evidence of manipulation of certain stocks by hedge funds on key reporting days. ... Read Full Answer >>

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