hedging

hedging
A means by which traders and exporters of grain or other products, and manufacturers who make contracts in advance for the sale of their goods, secure themselves against the fluctuations of the market by counter-contracts for the purchase or sale of an equal quantity of the product or of the material of manufacture. Whorley v. Patton-Kjose Co., 90 Mont. 461, 5 P.2d 210, 214.
A means by which a party who deals in the purchase of commodities in large quantities for actual delivery at some future time insures itself against unfavorable changes in the price of such commodities by entering into compensatory arrangements or counterbalancing transactions on the other side. Ralston Purina Co. v. McFarland, C.A.N.C., 550 F.2d 967, 970.
A transaction where an identified forward exchange contract is locked into an identified agreement to purchase or sell goods in the future. Siegel v. Titan Indus. Corp., C.A. N.Y., 779 F.2d 891, 893. Safeguarding one's self from loss on a bet or speculation by making compensatory arrangements on the other side. Whorley v. Patton-Kjose Co., 90 Mont. 461, 5 P.2d 210, 214. For various types of hedging techniques, see arbitrage; call option; futures contract; option; put option; short sale.
@ cross-hedging
The use of a futures contract on one financial instrument to hedge a position in a different financial instrument
@

Black's law dictionary. . 1990.

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Look at other dictionaries:

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  • hedging — Method of reducing the risk of loss caused by price fluctuation. It consists of the purchase or sale of equal quantities of the same or very similar commodities in two different markets at approximately the same time, with the expectation that a… …   Universalium

  • hedging — A means by which traders and exporters of grain or other products, and manufacturers who make contracts in advance for the sale of their goods, secure themselves against the fluctuations of the market by counter contracts for the purchase or sale …   Black's law dictionary

  • Hedging — Hedge Hedge, v. t. [imp. & p. p. {Hedged}; p. pr. & vb. n. {Hedging}.] 1. To inclose or separate with a hedge; to fence with a thickly set line or thicket of shrubs or small trees; as, to hedge a field or garden. [1913 Webster] 2. To obstruct, as …   The Collaborative International Dictionary of English

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