Selling Hedge

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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."

INVESTOPEDIA EXPLAINS '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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