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Multiple put/call option packages such as bear put spreads and other derivatives such as futures and CFDs are also popular for hedging. These, however, carry significantly more risks and should

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A short hedge is one where a short position is taken on a futures contract. It is typically . replication in the futures/options market, cross hedging can be employed. . a European call, K is the strike price for the call and put, and r is th

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Hedging strategies using LIFFE listed equity options Article (PDF Available) in Managerial Finance 29(11) · December 2003 with 187 Reads DOI: 10.1108/03074350310768544

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Hedging Strategies Using Futures. Welcome to the 3rd session of Financial Markets and Products. In the earlier session, we have learned the basics of futures markets, including the settlement and delivery procedures. In this session, we will learn the basic concepts of hedging. The term hedging means protection from uncertainty.

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Cross Hedging – Hedge Ratio The hedge ratio is the ratio of the size of the position taken in futures contracts to the size of the exposure. When the asset underlying the futures contract is the same as the asset being hedged, a hedge ratio of 1.0

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(Whichever hedging technique you have used, you are effectively doing the same thing – buying. You will buy a forward contract, buy at spot using a money market hedge, buy pounds sterling futures or buy (call = buy pounds sterling) options.) Currency swap A further possible foreign currency hedging technique is …

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For more reliable hedging strategies the use of options is needed. Using a collar strategy is a common way to hedge carry trades, and can sometimes yield a better return. Buying out of the money options. One hedging approach is to buy “out of the money” options to cover the downside in the carry trade.

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