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Hedge

[hej]

What is the definition of Hedge?
A transaction or series of transactions undertaken to reduce the risk of an investment, often by taking an offsetting position in a related security.
Using Hedge in an Example

A common example of a hedge is when an investor buys a stock and simultaneously purchases a put option on the same stock. This strategy can protect against potential losses in the stock's price by giving the investor the right to sell at a predetermined price.

Using Hedge in a sentence

To safeguard our portfolio from sudden market downturns, our financial advisor recommended that we hedge our largest stock investments.

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