Selling Hedge

DEFINITION of 'Selling Hedge'

A hedging strategy with which the sale of futures contracts are meant to offset a long underlying commodity position.

Also known as a "short hedge."

BREAKING DOWN 'Selling Hedge'

This type of hedging strategy is typically used for the purpose of insuring against a possible decrease in commodity prices. By selling a futures contract an investor can guarantee the sale price for a specific commodity and eliminate the uncertainty associated with such goods.

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RELATED FAQS
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    A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, ... Read Full Answer >>
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