What Does Hedging Mean In Stocks
Hedging is a term that you may have come across if you have invested in the stock market. The concept of hedging is to reduce the risk of potential losses in a portfolio by taking measures that offset or balance any adverse movements in the market. Essentially, hedging is a strategy that investors use to protect their investments from significant losses while still allowing for potential gains. In stocks, hedging is a risk management strategy that involves making an investment in a security that is expected to counterbalance any potential losses in another security. Hedging can be a complex process, and there are several ways to go about it. Here are some of the most common ways to hedge in stocks: Options trading This involves buying put options on a stock that you own or plan to purchase. A put option gives the buyer the right to sell a stock at a specific price within a specific time frame. If the stock price falls below the strike price, the put option can be exercised, allowing th
