Investors have a number of available options that will allow them to mitigate their exposure to an adverse movement in their stock portfolios. One of the best ways to hedge a portfolio of stocks is to use an index future. Many large cap stocks move in tandem with an index when a large a...
Someone wanting to hedge exposure to stocks may short-sell a futures contract on the Standard & Poor’s 500. If stocks fall, they make money on the short, balancing out their exposure to the index. Conversely, the same investor may feel confident in the future and buy a long contract –...
Forex or currency futures enable you to trade forex pairs at a specified price to be settled at a set date in the future or within a range of future dates Forex or currency optionslet you trade contracts that give the holder the right, but not the obligation, to buy or sell a currency...
How Hedge Funds Drove Market Selloff
Gold as an inflation hedge Gold actually has a mixed record on beating inflation. During the period of high inflation in the 1970s, gold prices surged until the Federal Reserve sharply raised interest rates to tamp down rising prices. Rising rates tend to strengthen the dollar, weighing on gol...
These are one of the most common types of derivatives used for hedging. An options contract gives the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price at a future date. F or example, an investor who holds a stock that they are concer...
A deep dive into a market driver with alpha generating potential. Why Carbon Prices are Rising & How to Invest Summary: New legislation introduced to congress this month would make it possible for the U.S. agriculture industry to sell carbon credits to corporations that need them, seeing as ...
They’re designed—in theory, anyway—to help investors monitor and hedge against wild fluctuations in the stock market. But these are complex instruments that come with their own set of unique risks that match, or even outweigh, the risks in the market itself. Like inverse and leveraged ETFs...
This is another strategy with relatively low risk but a potentially high reward if the trade works out. Buying puts is a viable alternative to the riskier strategy ofshort sellingthe underlying asset. Puts can also be bought tohedgedownside risk in a portfolio. However, because equity indices t...
In addition to forwards and futures,options contractsare traded on specific currency pairs. Forex options give holders the right, but not the obligation, to buy or sell a currency pair at a set price on a specific future date. Unlike the spot, forwards, and futures markets, the options mark...