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Risk Management

  Risk Management   |   Terms
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  • February 8, 2022
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Neutral Hedge

A hedge that is designed to neutralize connection to market forces. It is a combination of market risk offsetting positions that aims to earn a risk-free rate on the amounts invested in these positions irrespective of the market direction within a narrow range.

This hedge produces low risk for small movements in the prices of underlying securities or instruments. It involves, for example, buying or selling a number of option contracts.


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