A way of reducing the [[Risk|risk]] of an investment or trading [[Position|position]]. For example, a [[Short|short]] [[Futures|futures]] or [[Option|option]] position may be taken out to guard against a fall in price in the corresponding [[Cash|cash]] market. Any losses in the cash market will be offset by profits from the short futures or options position. Opposite of [[Long Hedge|long hedge]]. | A way of reducing the [[Risk|risk]] of an investment or trading [[Position|position]]. For example, a [[Short|short]] [[Futures|futures]] or [[Option|option]] position may be taken out to guard against a fall in price in the corresponding [[Cash|cash]] market. Any losses in the cash market will be offset by profits from the short futures or options position. Opposite of [[Long Hedge|long hedge]]. |