Options and FuturesUnderlying security Short Hedge Price Discovery Board of Trade Clearing Corporation Nearby (Delivery) Month Forex Market
Selling Hedge or Short Hedge
In the realm of finance, it is common practice for individuals to sell futures contracts as a form of protection against potential price declines of commodities that will be sold in the future. This strategy involves closing the open futures position by purchasing an equal number and type of contracts at the time the cash commodities are sold. This approach, known as hedging, serves as a safeguard against potential losses and is a valuable tool in risk management.
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