buying hedge

Definition

Buying futures to hedge against the sale of a cash commodity. An investor might use a buying hedge if he/she expects to buy a certain amount of the commodity in the future, but is worried about price fluctuations. He/she will buy a futures contract in order to be able to buy the commodity at a fixed price later. also called long hedge.

Use buying hedge in a sentence

The use of a buying hedge was employed by the broker who had made the recommendation to purchase future contracts.

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You should try and figure out a way to use a buying hedge to lower your risk on a different investment you are already in.

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The investor used a buying hedge for the amount of commodity he expected to buy,by creating a futures contract, allowing him to create a fixed price on a commodity he worried might have a price fluctuation in the future.

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