Short Hedge

Dictionary Says

Definition of 'Short Hedge'

An investment strategy that is focused on mitigating a risk that has already been taken. The "short" portion of the term refers to the act of shorting a security, usually a derivatives contract, that hedges against potential losses in an investment that is held long.

If a short hedge is executed well, gains from the long position will be offset by losses in the derivatives position, and vice versa.
Investopedia Says

Investopedia explains 'Short Hedge'

A common risk in short hedging is basis risk, or the risk that price levels will not change much over the period the hedge is in place; in this scenario, the asset held in the long position would not gain any value, and the short hedge would lose value.

Short hedging is often seen in the agriculture business, as producers are often willing to pay a small premium to lock in a preferred rate of sale in the future. Also, short hedges involving interest rates are common among institutional money managers that hold large amounts of fixed income securities and are concerned about reinvestment risk in the future.
Search results for

'Short Hedge'

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    favored by hedge funds and short sellers. ... Hedge Funds,Short Selling. ...
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  • Hedge Against Exchange Rate Risk With Currency ETFs

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    ... Therefore, to hedge the $10,000 position in the EWC units, the investor would short
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    A Brief History Of The Hedge Fund. November 15 2009 | Filed Under » Futures,
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    ... kind of money or don't meet the net worth guidelines, there are some exchange-traded
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  • Solving Mixed Options Problems On The Series 7

    http://www.investopedia.com/articles/professionaleducation/07/Series7OptionswStocks.asp
    ... The basic definition of a short hedge is short stock plus a long call. The investor
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  • Europe Bans Short Selling - Investopedia.com

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    ... Europe Bans Short Selling. Posted: August 12, 2011 2:28PM by ... Filed Under:
    Short Selling. In its simplest form, short selling involves ...
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    ... Is Good For Just because gold is not a perfect inflation hedge, nor an ... While gold's
    movements are very unpredictable over short periods of time, outperformance ...
  • Hedge Funds: Higher Returns Or Just High Fees?

    http://www.investopedia.com/articles/03/121003.asp
    ... Hedge funds - because they employ derivatives, short sales or non-equity investments -
    tend to be uncorrelated with broad stock market indexes. ...

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